Legal Updates

Pharmaceutical Law –Drug Pricing – Merck & Co Settlement

Pharmaceutical company Merck & Co recently settled two antitrust lawsuits.  The first was brought by a former employee, Dean Steike, and the second by a doctor, William Lacorte over the failure to pay government health programs rebates or discounted prices.

Merck allegedly gave discounts to hospitals that showed a preference for the cholesterol medication, Zocor, the arthritis treatment medication, Vioxx, and the indigestion medication, Pepcid, over rival products. However, it failed to issue rebates to government health programs in violation of the Medicaid Rebate Statute.

The Medicaid Rebate Statute requires drug manufacturers to report their pricing information to the government to ensure the government health care program, Medicaid, receives the same benefits as hospitals and other drug programs.  The claimants accused Merck of providing hospitals reduced prices and refusing to provide the government with the same pricing scheme to boost their sales.  In the case brought by former employee, Steike, Merck was accused of paying doctors kickbacks disguised as training and consulting fees to prescribe Zocor and Vioxx.

Drug manufacturer’s refusal to disclose the “best price” of drugs to the government is in violation of the law and drives the costs of healthcare up for consumers.  Attorney General Michael Mukasey reported     “ …that [the settlement] reflects our continuing effort to hold drug companies accountable for devising pricing schemes that deliberately seek to deny federal health care programs the same lower prices for drugs that are available to other commercial customers.”

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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.




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