Office of the Attorney General
Attorney General Stumbo Announces $4.3 million Settlement from Schering-Plough Corporation for Defrauding Kentucky Medicaid Program

Press Release Date:  Wednesday, August 30, 2006  
Contact Information:  Vicki Glass, 502-696-5643 Office  

Attorney General Greg Stumbo announced today that pharmaceutical manufacturer Schering-Plough Corporation, of Kenilworth, New Jersey, has agreed to pay a total of $435 million in civil damages and criminal fines and penalties to the United States government and the states participating in the settlement.

The settlement arises out of illegal sales and marketing activities that defrauded the Kentucky Medicaid program and the federal Medicare program.  These activities include reporting of fraudulent prices to the federal government to avoid paying Medicaid rebates, making illegal payments to physicians to induce them to prescribe Schering-Plough drugs and illegally promoting Schering drugs for “off-label” uses that had not been approved by the FDA.

The settlement also includes a $180 million criminal fine and a $50 million civil recovery for private health plans and insurance companies that were also defrauded by Schering’s illegal marketing activities.  In addition to the monetary payment, a Schering-Plough subsidiary pled guilty to criminal charges and was permanently excluded from Medicare, Medicaid, and all other Federal health care programs.

“This is the second time we have caught this big drug company cheating the Kentucky Medicaid program and stealing from the taxpayers of Kentucky,” Stumbo said.  “In 2004, Medicaid Fraud and Abuse Division recovered an additional $4,729,682.61 from Schering for lying to the federal government to avoid paying Medicaid rebates.  I am pleased that the Schering subsidiary that was guilty of these crimes has been permanently barred from preying on taxpayers again.”

Schering is also a defendant in another lawsuit filed by Attorney General Stumbo to recover additional damages for publishing false and inflated average wholesale prices (“AWPs”) which caused the Kentucky Medicaid Program and Kentucky Medicare beneficiaries to pay grossly excessive prices for Schering’s prescription drugs.

The Attorney General’s Tip Line for reporting allegations of Medicaid fraud is 1-877-ABUSE-TIP (1-877-228-7384).