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July 30, 2004
State to Recover Medicaid Money from Maker of Claritin

OLYMPIA -- Pharmaceutical manufacturer Schering Plough will reimburse Washington's Medicaid program $3.57 million in a nationwide settlement of allegations the drug maker failed to offer state Medicaid programs its best price for the popular antihistamine drug Claritin.

Under the settlement, Schering will reimburse overcharges totaling $140.7 million to Medicaid programs in 49 states and the District of Columbia. The states' settlement was reached in conjunction with a federal settlement also filed today in U.S. District Court in Philadelphia.

"This action will help make sure tax dollars are spent on vital health care programs and not on illegal profits for large drug companies," Attorney General Christine Gregoire said.

The Attorney General's Medicaid Fraud Control Unit helped investigate the case and took a leadership role in negotiating the settlement on behalf of the states. The state Department of Social and Health Services, which administers the Medicaid program, also assisted in the investigation.

The states alleged that Schering, when negotiating to provide Claritin for patients of two health maintenance organizations (HMOs), gave HMOs with certain discounts, concessions and incentives that were not reported in the Claritin best price. Under the federal Medicaid drug rebate statute, drug makers that supply products to Medicaid recipients must offer their best price and file that information with the Centers for Medicare and Medicaid Services. Best-price figures are then used to calculate rebates that drug makers pay to the Medicaid programs.

As a result of Schering's failure to incorporate the Claritin discounts into its best price, the state Medicaid programs were short changed millions in rebates as a result of the sale of Claritin to HMO patients. Because patient drug costs were reimbursed by Medicaid, individual patients will not receive refunds under the settlement.

As part of the agreement with the states, Schering will be required to report accurate pricing information on many of its products to federal and state governments. The company also will sign a corporate integrity agreement with the federal government that will require strict scrutiny of Schering's pricing and sales practices for the next five years.
Under the agreement, Schering Sales Corp., a subsidiary of Schering, also will plead guilty to federal criminal anti-kickback charges and pay a fine of $52.5 million.


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