Merck Will Pay $650M to End Discount Probes

Drug company alleged to have kept Medicaid in dark on lowest prices

By Matt Cantor, Newser Staff

Posted Feb 7, 2008 3:59 PM CST

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Merck Will Pay $650M to End Discount Probes — 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 for four drugs, including Vioxx and Zocor, and to resolve allegations of improper marketing to... (Associated Press)

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. (More pharmaceutical companies stories.)

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