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Merck to pay $650M to settle fraud allegations

Pharma Compliance Alert, February 13, 2008

Allegedly failing to pay rebates and improperly marketing Vioxx, Zocor, and Pepcid will cost Merck $650 million, according to a Department of Justice (DOJ) press release.

The settlement resolves allegations in two separate whistleblower cases.

In one case, Merck allegedly induced physicians to prescribe Zocor and Vioxx by disguising excess payments as fees paid for training, consultation, or market research. Merck also allegedly offered deep discounts for the two drugs if hospitals used large quantities of those drugs instead of competitors' drugs. Merck allegedly hid the discounts by reporting higher prices to the government, a violation of the Medicaid Rebate Statute.

The second case revolved around allegations that Merck also provided substantially reduced prices for Pepcid once the hospitals agreed to use the drug instead of a competitor's. Merck improperly termed the prices it offered to hospitals as "nominal" and excluded those discounts from the prices it reported to the government.

Merck will pay $399 million plus interest to settle the alleged violations involving Vioxx and Zocor and will pay $250 plus interest to settle claims relating to Pepcid.

In addition, Merck entered into a five-year corporate integrity agreement.

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