Schering-Plough to settle federal probe

BOSTON — Schering-Plough Corp. on Tuesday agreed to pay $435 million and plead guilty to conspiracy to settle a federal investigation into marketing of its drugs for unapproved uses and overcharging Medicaid for certain drugs.

Schering-Plough, based in Kenilworth, N.J., said it will pay $255 million to resolve civil aspects of the previously disclosed investigation. A subsidiary, Schering Sales Corp., will pay a criminal fine of $180 million and plead guilty to one count of conspiracy to make false statements to the government. The agreement is subject to court approval.

Schering-Plough said the settlement resolves an investigation by the U.S. Department of Justice and the U.S. Attorney's Office in Boston that began before a new management team took over at the company in April 2003.

"With this agreement, we are putting issues from the past behind us," said Brent Saunders, senior vice president for compliance and business practices.

The agreement comes two years after Schering-Plough agreed to pay $346 million to settle charges that it paid a kickback to a big health insurer to protect the market for its allergy drug, Claritin.

U.S. Attorney Michael Sullivan, who announced Tuesday's settlement in a news conference in Boston, said health-care corruption "erodes public confidence, compromises the patient/physician relationship and adds costs to important government programs."

"The American people, as both taxpayers and consumers, expect our health-care system to be free from fraud and corruption," Sullivan said.

The investigation that led to Tuesday's settlement began in 2001.

Investigators found evidence that Schering-Plough marketed drugs for so-called "off-label" uses for which they were not approved by government regulators, even though doctors can individually choose to prescribe drugs for those purposes.

One such drug was Temodar, which the Food & Drug Administration in 1999 approved to treat anaplastic astrocytoma, a type of brain tumor, in patients who hadn't responded to other drug regimens. Sullivan said Schering promoted the drug to treat several other types of brain cancers and cancer that spread to the brain from elsewhere, which the FDA had not approved. Temodar, Schering's No. 4 drug, had sales of $588 million last year.

Saunders said the company has agreed to plead guilty to making false statements in marketing Temodar, related to its sales people promoting the drug to doctors for uses other than the approved one.