For Immediate Release - September 30, 2010

Jury Finds Merck & Co. Liable for $4.5 Million in Damages to Massachusetts Medicaid Program

BOSTON - Today , a federal jury in U.S. District Court in Boston found Merck & Co., Inc, (formerly Schering-Plough Corporation) liable for $4.5 million in damages to the Massachusetts Medicaid program for having reported false and fraudulent prices to industry price reporting services between 1995 and 2003 for its former generic drug subsidiary, Warrick Pharmaceuticals Corporation (Warrick), Attorney General Martha Coakley's Office announced today.

In its lawsuit, Attorney General Coakley's Office alleged that Schering-Plough Corporation, its wholly-owned subsidiary, Schering Corporation, and Warrick reported false and inflated prices for three albuterol products, a drug used to treat asthma and other respiratory diseases, to industry price reporting services, including First Data Bank. Numerous health insurance plans, and over 40 Medicaid programs nationwide, including the Massachusetts Medicaid program MassHealth, use these prices to determine reimbursement to pharmacies for prescriptions they fill with a pharmaceutical manufacturer's drugs.

"Our office takes very seriously our responsibility to hold accountable those who defraud the Medicaid program by reporting inaccurate prices to industry price reporting services," said AG Coakley. "We are very pleased that the jury's decision will result in the reimbursement of millions of dollars to the state's Medicaid Program. We remain committed to rooting out fraud and eliminating waste to ensure healthcare resources are spent appropriately and we will continue to aggressively pursue recoveries from companies that defraud Medicaid."

The lawsuit, filed in 2003, charged that Warrick violated the Massachusetts False Claims Act (MFCA), the Massachusetts Medicaid False Claims Act (MMFCA) and committed common law fraud.

Today, a jury ruled in favor of the Commonwealth on all three claims, determining that Warrick's falsely reported prices resulted in $4,563,328 in damages to MassHealth. These damages are subject to trebling under the MFCA and the MMFCA. The jury also found under the MFCA that the defendants' caused over 989,000 false claims to be filed by pharmacies with MassHealth. Each false claim is subject to civil penalties of between $5,000 and $10,000.

The Commonwealth has previously settled with ten other defendants in this case: Actavis Elizabeth LLC, Dey, Inc.; Barr Laboratories, Inc.; Duramed Pharmaceuticals, Inc; Ethex Corporation; Roxane Laboratories, Inc.; Teva Pharmaceuticals USA, Inc.; Ivax Corporation; Watson Pharma, Inc., and Watson Pharmaceuticals, Inc.--recovering a total of $20.3 million from those ten companies for the Massachusetts Medicaid Program.

Attorney General Coakley's Medicaid Fraud Division works to prevent and if necessary, prosecute provider fraud and violations of state law pertaining to fraud in the administration of the Medicaid Program. The division often works collaboratively with other enforcement authorities in other states, as well as with federal enforcement authorities. Since 2007, Attorney General Coakley's Office has recovered more than $173 million on behalf of the Commonwealth's Medicaid program.

This case was prosecuted by Assistant Attorneys General Peter Mullin, K. Nathaniel Yeager, Robyn Dollar, John Pina III, Steven Sharobem, Colleen McCarthy and Gregory Matthews, with the assistance of Investigators John H. Walsh, Steven Devlin and Anthony Megathlin, all of Coakley's Medicaid Fraud Division. Paul Jeffrey, MassHealth's Director of Pharmacy and his staff played a major role in assisting with this investigation.

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