Schering-Plough Admits Lying To US Government

By Mark Hoerrner

Resolving five years of investigations by the U.S. Dept. of Justice and the U.S. Attorney's Office, pharmaceutical paragon Schering-Plough offered to plead guilty to a single count of conspiracy and was hit with a heavy settlement fee.

"With this agreement, we are putting issues from the past behind us," Brent Saunders, senior vice president for compliance and business practices, told the Associated Press.

Perhaps. Much as in the world of high-dollar stocks, past performance is a good indicator of future actions. Schering-Plough execs gave basically the same speech two years earlier when it had to pay out $345 million because it paid kickbacks to protect the market for its best-selling allergy drug, Claritin.

Schering-Plough, which employs more than 30,000 around the world, is riding on a stock high that's just a couple of dollars beneath its year-long high of $22.53 per share. The company's drug lines are a who's who in contemporary medicene: Vytorin, Clarinex, Nasonex, Remicade, Drixoral; it even owns the Coppertone line of skin protection and tanning products.

$255 million of the $435 will be used to settle the company's civil claims and the remaining $180 million is assessed as a criminal fine for conspiring to make false statements to the U.S. government.

The U.S. Attorney's office said the victory was for the American public.

"The American people, as both taxpayers and consumers, expect our health care system to be free from fraud and corruption," U.S. Attorney Michael Sullivan told the Associated Press. He also said that scheming actions by U.S. healthcare companies denigrate the public trust that exists with the healthcare industry.

The problem lies in what the drug companies choose to say about their drugs when they hit the market. In Schering-Plough's case, the government found that the company was making claims about its drugs that were not approved by Food & Drug Administration regulators. Doctors, of course, can prescribe drugs in any way they see fit, essentially, but the government generally puts it's foot down when a company specifically touts that a drug works for an unapproved purpose.

Temodar, the Associated Press reports, was one of the drugs that the FDA had approved to treat a specific type of brain tumor. Sullivan claimed that Schering-Plough had marketed the drug as a remedy for multiple brain cancers which the FDA had not approved. Claims like this can stimulate big business in drug sales. Temodar alone had sales of $588 million in 2005.