DOJ: News Release

Pharmaceutical Company to Reimburse State $204,000 in Medicaid Fraud Settlement

HELENA – Montana will receive more than $204,000 in Medicaid restitution and penalties as part of a settlement recently negotiated between the National Association of Medicaid Fraud Control Units and pharmaceutical manufacturer Schering Plough. The agreement involves 49 states and the District of Columbia.

Schering Plough will pay $140.7 million in damages and penalties to states’ Medicaid programs as part of an agreement to resolve allegations Schering underpaid Medicaid drug rebates on the popular antihistamine drug Claritin. Claritin has been available without a prescription since late 2002.

Under federal law, drug manufacturers that supply products to Medicaid recipients must provide Medicaid programs with the “best price” available for each product. Manufacturers must file “best price” information with the Centers for Medicare and Medicaid Services, which in turn uses the information to calculate rebates for state Medicaid programs.

The federal law requires that the reported “best price” include discounts, rebates and other incentives. In this case, it was alleged that when Schering was negotiating with two health-maintenance organizations, the company provided the HMOs with a number of discounts, concessions and incentives that were not reported as part of the “best price.”

Ultimately, states received rebates that were millions of dollars less than they would have been had Schering appropriately reported the best price.

Total payments to Montana include $204,831.53 in Medicaid restitution and penalties. The funds are repaid to the Montana Medicaid program administered by the state Department of Public Health and Human Services. The Montana settlement also included $537,136.87 in federal matching funds.

The case was handled by the National Association of Medicaid Fraud Control Units and the U.S. Department of Justice, based on investigations and data from state Medicaid Fraud Control Units.

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