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August 29, 2006
Washington Medicaid to Receive More Than $3 Million in Settlement with Schering-Plough

Washington helped lead multi-state investigation concerning improper drug marketing

OLYMPIA – Attorney General Rob McKenna and Department of Social and Health Services Secretary Robin Arnold-Williams today announced that Washington’s Medicaid program will recover more than $3 million from a settlement with drug manufacturer Schering-Plough Corporation that resolves allegations that the company improperly marketed several products.

Attorneys general for Washington and New York led an investigation and settlement negotiations that, along with a related federal settlement, require Schering-Plough Corporation and its subsidiary, Schering Sales Corporation, to pay $435 million. The companies will pay nearly $255 million in damages and penalties to settle civil liabilities and reimburse state Medicaid and federal health care programs. In addition, Schering Sales Corporation agreed to plead guilty in federal court in Boston to criminal charges and pay a $180 million fine.

“This settlement sends a clear message to the pharmaceutical industry that we will not tolerate attempts to profit at the expense of patients and government health programs,” said Senior Counsel David Waterbury, one of two attorneys who led the states’ investigation and settlement negotiations. “It’s illegal and unethical for drug companies to promote their products to treat illnesses that they were not approved for, manipulate prices, or offer financial incentives to prescribers.”

States and federal agencies alleged that Schering, which has headquarters in New Jersey, excluded certain price discounts from the formula used to calculate Medicaid program rebates for the allergy drug Claritin Redi-Tabs and the potassium supplement K-Dur. As a result, Medicaid agencies paid higher prices.

The company is also accused of improperly promoting its brain cancer medication Temodar for purposes that had not been approved by the U.S. Food and Drug Administration.

Lastly, the agencies alleged Schering illegally offered kickbacks to physicians to induce them to prescribe hepatitis drugs PEG-Intron and Rebetron, and bladder cancer medication Intron-A. 

Schering must also enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services and be monitored for compliance.

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Media Contacts:
David Waterbury
, Senior Counsel, (253) 593-2154
Kristin Alexander, Public Information Officer, (206) 464-6432,


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