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December 2, 2008 9:31:14 AM CST

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Merck Will Pay $650M to End Discount Probes

Posted Feb 7, 08 3:59 PM CST in US,  Business 

(Newser) – Drug company Merck will dish out $650 million to resolve lawsuits and probes into marketing schemes, the Wall Street Journal reports. Central to the investigations is the company’s “nominal pricing,” which slashed some drug prices by 90% for hospitals but hid the discounts from Medicaid, even though federal law demands that drug companies offer the government program their lowest prices.

Such hidden discounts are considered legit for charity purposes, but not for marketing. Merck is also shelling out in Louisiana, where a doctor sued over the company’s practice of giving hospitals discounts on heartburn med Pepcid to grab major sales boosts. Altogether, "it's one of the largest resolutions that the Justice Department has reached with pharmaceutical companies ever," said a US attorney.

Source Wall Street Journal

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U.S. Attorney Patrick Meehan makes remarks at a news conference in Philadelphia, Thursday, Feb. 7, 2008. Merck and Co. has agreed to pay $671 million to settle claims that it overcharged Medicaid programs...   (Associated Press)
Vioxx is arranged on a counting tray, laying on top of the botttle, at The Pennington Apothecary in a Pennington, N.J. file photo from Sept. 30, 2004. Merck and Co. has agreed to pay $671 million to...   (Associated Press)
Richard T. Clark, CEO & President, Merck & Co., speaks during an interview at the corporate headquarters in White House Station, N.J., in this June 17, 2005 file photo. Merck and Co. has agreed to pay...   (Associated Press)
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