Schering-Plough Prepares for Indictment
Pharmaceutical giant Schering-Plough Corp. has received a letter from the Massachusetts U.S. Attorney’s Office advising the company that it is under federal grand jury investigation.
While the company had previously disclosed it was under investigation for its sales, marketing and clinical practices, Schering-Plough said that the letter suggests the government intends to pursue an indictment.
The investigation will focus on four areas: Offering free drug samples, clinical trial grants and other items of value to physicians and managed care organizations in exchange for the purchase of Schering-Plough products (paid for through federal health care programs); selling misbranded or unapproved drugs (also known as off-label marketing); falsifying pricing information to the government for the purposes of calculating rebates paid to the Medicaid program as well as failing to disclose prices under a repackaging agreement with a managed care customer; and obstructing justice.
Schering-Plough said that it will cooperate with the investigation and has been advised that it can submit evidence and legal arguments in response to the allegations. Last month, Schering-Plough tapped former Pharmacia head Fred Hassan as CEO in hopes the executive could lead a turnaround for the company.
Legal probes of pharmaceutical marketing have become almost routine (although the charges of obstructing justice against Schering-Plough could be especially serious). Last summer, Eli Lilly came under investigation for off-label marketing of Evista, an osteoporosis treatment. Pfizer is embroiled in a long-standing lawsuit over alleged off-label marketing of the epilepsy drug Neurontin, produced by Warner-Lambert and Parke-Davis (which Pfizer acquired in 2000).
