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Utah Fraud Laws

Posted by Tamara

State Attorney General Mark Shurtleff announced recently that an agreement has been reached with Schering-Plough Corporation to settle allegations that the pharmaceutical manufacturer defrauded the Medicaid Program under Utah fraud laws. The company also improperly marketed drugs for “off-label” use. Schering will pay the state and federal government nearly $255 million in damages and penalties for Medicaid and federal health care programs. Also, a company division will plead guilty in federal court in Boston to criminal charges related to this conduct and pay $180 million in criminal fines.

Under the terms of Utah’s settlement, the state will recover $1,082,539 for the Utah Medicaid Program; $323,319 of that amount will be paid directly to Utah, with the balance going to the federal government to reimburse its share of the Medicaid costs.

“This is a huge recovery for taxpayers. Hopefully pharmaceutical manufacturers will finally get the message that breaking the law is bad for business and bad for consumers,” says Shurtleff. The conduct at issue with the Pennsylvania-headquartered manufacturer falls into three categories:

  • Schering’s exclusion of certain price discounts from the formula used to calculate Medicaid Program rebates. This resulted in an underpayment of those rebates for the allergy drug Claritin Redi-Tabs and the potassium supplement K-Dur.
  • The improper “off-label” marketing of brain cancer medication Temodar.
  • The company’s illegal payments to physicians to induce them to prescribe hepatitis drugs PEG-Intron and Rebetron and bladder cancer medication Intron-A.

Resulting losses to state Medicaid Programs were in excess of $80 million, which, under the terms of the national settlement, Schering will be required to repay along with penalties, resulting in a total Medicaid recovery of $203 million.

The civil settlement with Schering also requires the company to enter into an agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services in order to monitor the company’s operations and ensure compliance with the law in the future.

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