Merck to pay Mass. Medicaid program $24 million

By Jessica M. Karmasek | Dec 21, 2011


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley said Tuesday the nation's second largest drug manufacturer has agreed to pay $24 million to the state's Medicaid program.

Merck & Co. Inc.'s check would make it the largest single payment for one Medicaid fraud case in state history, Coakley's office said.

Merck is the last company to settle a False Claims Act lawsuit brought by the attorney general's Medicaid Fraud Division in 2003 against 13 generic drug manufacturers for knowingly reporting inflated prices to industry price reporting services from 1995 to 2003.

More than $47 million has now been recovered for the state's Medicaid program as a result of the suit.

"Our office will continue to hold accountable those who defraud the Medicaid program and taxpayers by inflating and fraudulently reporting drug prices," Coakley said in a statement.

"By taking this case to trial and winning a favorable verdict, we were able to recover millions of dollars for the state's Medicaid program. We remain committed to rooting out fraud to ensure that healthcare resources are available to those who desperately need them."

In this case, the attorney general alleged Merck, its wholly-owned subsidiary Schering Corp. and its generic drug subsidiary Warrick Pharmaceuticals Corp. reported false and inflated prices for three albuterol products to industry price reporting services. Albuterol is a drug used to treat asthma and other respiratory diseases.

Private health insurance plans and most state Medicaid programs use the prices reported to determine reimbursement to pharmacies for prescriptions filled with a manufacturer's drugs.

Following a jury verdict in favor of the State in federal district court last year, Merck and Warrick agreed to the $24 million settlement.

The 12 other manufacturers settled prior to trial. They include: Mylan Inc.; Par Pharmaceutical Inc.; Actavis Elizabeth LLC; Dey Inc.; Barr Laboratories Inc.; Duramed Pharmaceuticals Inc; Ethex Corp.; Roxane Laboratories Inc.; Teva Pharmaceuticals USA Inc.; Ivax Corp.; Watson Pharma Inc.; and Watson Pharmaceuticals Inc.

A total of $23.4 million was recovered from those companies.

A spokesman for Merck told The Boston Globe the company did not admit any wrongdoing in the settlement.

"We believe that settlement of the Massachusetts case is in the best interests of the company because it eliminates the uncertainty of ongoing litigation," Ron Rogers told the newspaper.

From Legal Newsline: Reach Jessica Karmasek by email at

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