Merck, Aventis Settlements Net $23 Million for NC, Announces AG Cooper

February 11, 2008 -- Medicaid fraud cases against Merck and Aventis recover money for health care, schools Raleigh: More than $23 million will benefit North Carolina’s Medicaid Program and public schools thanks to settlements with two pharmaceutical companies, North Carolina Attorney General Roy Cooper announced today.

“Drug makers shouldn’t cut corners with a program the helps the neediest among us,” Cooper said. “Schemes like these hurt taxpayers and drive up health care costs for all of us."

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North Carolina will receive $22,547,677 as part of two global settlements with Merck & Co., Inc. totaling $649 million to resolve allegations that Merck failed to pay rebates due state Medicaid Programs. Merck is the manufacturer of popular drugs Zocor, Vioxx, and Pepcid. The settlements involve 49 states, the District of Columbia and the federal government and also resolve claims filed by whistleblowers in federal court in Pennsylvania, Nevada and Louisiana.

Pharmaceutical manufacturers that supply products to Medicaid recipients are required by federal law to give Medicaid Programs the best price available for those products. Cooper and the other states allege that Merck marketed drugs to hospitals at a discount of up to 92 percent from the catalog price if the hospitals reached certain market shares for the drugs. The states contend that Merck should have reported these discounted prices to Medicaid but did not, causing state Medicaid programs to pay more for the drugs than they should have.

North Carolina recovered $1,146,342.68 as part of a settlement with Aventis Pharmaceuticals, Inc. which has agreed to pay $22.7 million plus interest to the United States, 38 states and D.C. to settle claims that it defrauded states’ Medicaid programs through its drug pricing and marketing practices. Following a complaint by a whistleblower, investigators uncovered that Aventis caused false claims to be submitted to Medicaid programs by inflating the average wholesale price of its drug, Anzemet, which is used in cancer and radiation treatment to prevent nausea and vomiting.

From September 1, 1997 through June 30, 2004, Aventis allegedly “marketed the spread” on Anzemet to doctors and other health care providers in order to increase the drug’s market share and the company’s profits. The “spread” was the difference between the amount a health care provider paid Aventis for the drug and the amount the health care provider was reimbursed by Medicaid. Under the scheme, providers billed Medicaid for the inflated average minimum price and then kept the extra money.

Medicaid is a joint federal-state program that provides health insurance for the poor.

Cooper’s Medicaid Investigations Unit has recovered more than $250 million over the past six years. The unit aggressively investigates fraud and abuse of Medicaid benefits by doctors, hospitals, pharmacies and health care providers, and also investigates patient abuse and neglect in nursing homes and other Medicaid-funded facilities.

Source: North Carolina Attorney General