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Attorney General Ellen F. Rosenblum

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OREGON ATTORNEY GENERAL HARDY MYERS ANNOUNCES $435 MILLION NATIONAL SETTLEMENT WITH SCHERING-PLOUGH

August 29, 2006

Action settles state and federal civil and criminal charges arising from company's improper marketing practices for its products

Oregon Attorney General Hardy Myers today announced that his Medicaid Fraud Unit has reached an agreement with pharmaceutical manufacturer Schering-Plough Corporation to join a national settlement of a number of allegations concerning the marketing and distribution of certain of its products to the State Medicaid Program.

As a result of the national settlement, the company will pay the state and federal government nearly $255 million in damages and penalties for Medicaid and federal health care programs.  Additionally, in connection with this settlement, a Schering division will plead guilty in federal court in Boston to criminal charges related to this conduct, agreeing to pay total criminal fines of $180 million.

The conduct at issue with Schering, a Pennsylvania-headquartered manufacturer of a wide variety of pharmaceutical products, fell into three categories: Schering's exclusion of certain price discounts from the formula used to calculate Medicaid Program rebates and resulting underpayment of those rebates for the allergy drug Claritin Redi-Tabs and the potassium supplement K- Dur;  the improper "off-label" marketing of brain cancer medication Temodar to Medicaid and Medicare recipients; and the company's payment of illegal remuneration to physicians to induce them to prescribe hepatitis drugs PEG-Intron and Rebetron, and bladder cancer medication Intron-A to Medicaid recipients.

Resulting national losses to state Medicaid Programs were in excess of $80 million which, under the terms of the national settlement, Schering will be required to repay along with penalties, resulting in a total Medicaid recovery of $203 million for 49 states and the District of Columbia. Individual state recoveries were calculated based on actual expenditures for the drug:  Oregon's Medicaid Program will be credited with over $1 million in restitution and penalties as a result of the settlement.

The civil settlements with Schering further require the company to enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services, in order to monitor the company's operations and ensure compliance with the law in the future.

Contact:

Stephanie Soden, (503) 378-6002
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