Settlement reached in drug price controversy

Tuesday, Aug. 3, 2004 | 9:28 a.m.

CARSON CITY -- Nevada will receive $816,000 from a drug manufacturer that overcharged the state Medicaid program for the antihistamine drug Claritin.

Attorney General Brian Sandoval said Monday an agreement in principle has been reached between the 49 states and Schering Plough to pay $140.7 million to state Medicaid programs.

This is the latest in the suits by states against drug companies. In May the states entered into a $38 million settlement with Warner-Lambert involving allegations of deceptive off-label marketing of the drug Neurotin.

Chief Deputy Attorney General Tim Terry said there are other suits pending in Reno and in Boston against drug companies.

In Reno the state is suing such companies as Abbot Labs, Baxter, Bristol-Myers Squibb, Dey, GlaxoSmithKline and Pharmacia, alleging these manufacturers jacked up the price of prescription drugs sold to the Medicaid program and consumers.

Terry said another suit is pending in Boston against other manufacturers involving price manipulation.

Terry said the federal law requires drug manufacturers to supply the Medicaid programs with the best price. In the Schering Plough case, it gave two HMOs a better discount than it gave Medicaid and the company failed to report the lower prices to the federal government.

Terry said the state's settlement was reached in conjunction with a federal settlement in which Schering Sales Corp., a subsidiary of Schering, will plead guilty to federal criminal anti-kickback charges and pay a fine of $52.5 million. Schering also entered into a civil settlement and will pay $282.3 million to the federal government.

The $816,000 will go back to the Medicaid program, Terry said.

The settlement provides Schering will be required to report accurate pricing information to the federal and state governments on many of its products.