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S-P shells out

US firm agrees to pay $435m in fines to settle allegations of illegal marketing practices

Schering-Plough (S-P) has agreed to pay $435m in fines and to plead guilty to conspiracy in order to settle a US federal investigation into its past sales and marketing practices.

The New Jersey-based firm said it will pay a criminal fine of $180m and plead guilty to one count of conspiring to make false statements to the government. It will also pay a further $255m to resolve civil aspects of the investigation.

The settlement resolves charges of defrauding the federal Medicaid health insurance programme for the poor on sales of the antihistamine, Claritin, and the potassium deficiency drug, K-Dur among others.

ìThis settlement sends a clear message to the pharmaceutical industry that the Justice Department will not tolerate these deceptive and illegal marketing practices,î said deputy attorney general, Paul McNulty.

S-P's senior vice president for global compliance and business practices, Brent Saunders, said the firm had made ìgreat progress in building an organisation that puts business integrity at the centre of its workî since a new management team was installed in April 2003.

ìWith this agreement, we are putting issues from the past behind us,î he added.

S-P said it set aside $500m in a litigation reserve a year ago to settle pending investigations.

The probe was launched in November 2002, when S-P received subpoenas from the US Attorney's Office in Massachusetts, relating to the marketing strategies behind brain cancer therapy, Temodar, and hepatitis medicines, Intron A and Rebetron, including grants, honorariums and items of value given to managed care organisations and doctors.

The developments led to the resignation of then-CEO, Richard Kogan, although at the time, analysts said his departure was connected to a string of hiccups that had seen the S-P share price tumble.

US attorney, Michael Sullivan, who announced the federal settlement, said S-P had promoted Temodar to treat several other types of brain cancer, indications that the Food and Drug Administration had not approved.

In July 2004, S-P agreed to pay $345 to settle charges that it offered and paid a kickback of $1.8m to a health maintenance organisation to keep Claritin on its formulary.

30th September 2008

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