Healthy Skepticism Library item: 12773

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Goldstein J.
Pricing of Old Drugs Haunts Merck
The Wall Street Journal 2008 Feb 7
http://blogs.wsj.com/health/2008/02/07/merck-settles-pricing-probes-the-slow-wheels-of-justice/

Full text:

Merck has agreed to pay more than $649 million to settle allegations that the company underpaid rebates to Medicaid. The investigations and settlements took so long that all of the drugs involved are now has-beens for the company.

At issue: so-called “nominal pricing.” Drugmakers are obligated to offer Medicaid their best prices. But Merck was accused of giving what amounted to better discounts to hospitals, which helped the company achieve certain market-share goals. A few years back, the Senate looked into nominal pricing by 19 drug companies.

The allegations in the cases involve the company’s behavior from 1996 through 2006, and involve the heartburn remedy Pepcid and cholesterol-fighters Mevacor and Zocor, all of which are now generic, as well as the painkiller Vioxx, which was pulled from the market in 2004, the company said. (The Pepcid-related stuff ended in 2001, according to the company.)

The two settlements were announced today in cases that involve the federal government, the District of Columbia and 49 states. In one, Merck agreed to pay $250 million plus interest. In the other, the company has agreed to pay $399 million plus interest. The company didn’t admit wrongdoing as part of the settlement.

This announcement and the sums shouldn’t come as too much of a shock to attentive investors. Merck said in December that it was taking a charge of $670 million to settle federal and state claims related to nominal pricing and other issues.

Plus, when you’ve already stomached a $4.85 billion Vioxx settlement, what’s another $670 million?

Update: Merck also settled allegations that it improperly paid doctors to prescribe its products, the WSJ reports.