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Front Page » September 12, 2006 » Local News » Utah, U.S. Government Reach $435 Million Agreement in Med...
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Utah, U.S. Government Reach $435 Million Agreement in Medicaid Fraud Civil Lawsuit


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Utah Attorney General Mark Shurtleff recently announced reaching an agreement with Schering-Plough Corporation to settle civil suit allegations that the pharmaceutical manufacturer defrauded the Medicaid program and improperly marketed drugs for off-label use.

Pursuant to the agreement, Schering will pay Utah and the United States government nearly $255 million in damages and penalties for Medicaid and federal health care programs.

In addition, a company division will plead guilty in federal court in Massachusetts to criminal charges related to the conduct and pay $180 million in criminal fines.

"This is a huge recovery for taxpayers. Hopefully, pharmaceutical manufacturers will finally get the message that breaking the law is bad for business and bad for consumers," said Shurtleff.

The conduct at issue with the Pennsylvania-headquartered manufacturer falls into three categories:

•Schering's purported exclusion of certain price discounts from the formula used to calculate Medicaid Program rebates.

The alleged action resulted in an underpayment of rebates for the allergy drug Claritin Redi-Tabs and the potassium supplement K-Dur.

•The purported improper off-label marketing of brain cancer medication Temodar.

•The company's alleged payments to physicians to induce doctors to prescribe hepatitis drugs PEG-Intron and Rebetron and bladder cancer medication Intron-A.

Resulting losses to state Medicaid programs were in excess of $80 million. Under the terms of the national settlement, Schering will be required to repay the losses along with penalties, resulting in a total Medicaid recovery of $203 million.

Under the terms of Utah's settlement, the state will recover $1,082,539 for the state's Medicaid program. Of the total, $323,319 will be paid directly to Utah, with the balance going to the federal government to reimburse its share of the Medicaid costs.

The civil settlements require Schering to enter into an agreement with the U.S. Department of Health and Human Services' general inspector office in order to monitor the company's operations for future compliance with the law.

The settlement was negotiated by the National Association of Medicaid Fraud Control Units joined in by 49 states and the District of Columbia.

The attorney general's office oversees the Utah Medicaid Fraud Unit to protect the integrity of the statewide program.

Carbon County residents report suspected abuse by visiting http://attorneygeneral.utah.gov/medicaidfraud.htm on the Internet or calling toll-free at 1-800-244-4636.


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