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Schering-Plough Target Of Criminal Investigation By U.S. Attorney’s Office

Charges Include Misbranded Drug Sales, False Drug Pricing, And Obstruction Of Justice


June 5, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Schering-Plough Corp. recently announced the U.S. Attorney’s Office for the District of Massachusetts had informed the company it is the target of a criminal investigation.

The company revealed in 2002 that the U.S. Attorney’s Office was investigating its sales, marketing, and clinical trial practices. This latest investigation involves four areas.

The first charge is that Schering-Plough provided remuneration in the form of drug samples, clinical trial grants, or other services of value to managed-care organizations, physicians, and others to entice them to purchase Schering-Plough products with payments through federal healthcare programs. A second charge involves selling misbranded or unapproved drugs [those promoted for indications which the U.S. Food & Drug Administration (FDA) hasn’t provided].

A third charge is submitting false pharmaceutical pricing information to the government for purposes of calculating rebates to be paid to the Medicaid program, by failing to include the prices of products under a repackaging arrangement with a managed-care customer as well as the prices of free and nominally priced goods provided to that customer to induce the purchase of Schering-Plough products. Finally, the company is charged with destroying documents and obstructing justice in relation to the government’s investigation.

Schering-Plough’s press release indicates that it believes the Justice Department intends to pursue an indictment and that it has substantial evidence to support that indictment.

Schering-Plough manufactures pharmaceutical products from four subsidiaries: two in Las Piedras and Manati and two in Kenilworth and Union, N.J. A leader in the development of allergy and respiratory pharmaceutical products, Schering-Plough Products LLC (SP) last year finally reached an agreement with the FDA after two years of regulatory problems with the current good manufacturing practices at its plants.

The company paid a $500 million fine and submitted a work plan for its four sites to ensure that methods, facilities, and controls used to manufacture drugs would be constantly maintained and in FDA compliance. However, the FDA criminal investigation continued and kept clouding Schering-Plough’s future despite the entrance of Chairman & President Fred Hassan, a former president of Pharmacia.

Schering-Plough’s first-quarter (1Q) 2003 sales were $2.2 billion, a 15% decrease compared with $2.6 billion during the same period a year earlier. Net income was down 71% to $173 million from $600 million in 1Q 2002.

This Caribbean Business article appears courtesy of Casiano Communications.
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