Merck agrees to pay more than $650 million to settle Medicaid lawsuits

Merck & Co. has agreed to pay more than $650 million to settle allegations that it did not pay proper rebates to Medicaid and other health care programs, and that it gave incentives to doctors to prescribe its products, the US Department of Justice and the drugmaker announced Thursday.

Merck contends its practices were consistent with all applicable regulations and contracts at the time and stated that “the settlements do not constitute an admission of liability or wrongdoing.” Spokesman Ronald Rogers added, “we believe this is the best and most appropriate way to resolve these lengthy investigations and bring these matters to a close.” As a result of the agreements, federal courts in Philadelphia, New Orleans and Nevada will dismiss lawsuits against the drugmaker.

US Attorney General Michael Mukasey said the agreement is one of the largest healthcare fraud settlements ever reached by the Justice Department, noting that the federal government will receive more than $360 million, and forty-nine states and the District of Columbia will get over $290 million. Former Merck employee H. Dean Steinke will receive $68.2 million of the total for alerting authorities to Merck’s activities via a whistleblower lawsuit.

The settlements relate to four of Merck’s drugs: Vioxx, which was withdrawn from the market in 2004, Zocor, Mevacor and Pepcid. According to the Justice Department, Merck offered discounts to hospitals as incentives to buy its drugs but did not offer the price cuts to Medicaid, as is required by law.

In addition to the payment, which Merck anticipated by taking a $670 million charge in the fourth quarter of 2007, the company will enter into a corporate integrity agreement with the US Department of Health and Human Services.

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