Consumer Fraud

Merck company Organon to pay several states $31 million to settle Medicaid fraud allegations

whistleblower Merck company Organon to pay several states $31 million to settle Medicaid fraud allegationsFollowing an investigation into possible Medicaid fraud, Drug maker Organon USA Inc., a subsidiary of pharmaceutical giant Merck, has agreed to pay $31 million to settle allegations by several U.S. states that it overcharged their Medicaid programs for the anti-depressant Remeron and Remeron SolTab.

The states claimed that Organon encouraged pharmacies to offer Remeron to their nursing home clients by providing the drug at a discount, which gave Organon a competitive edge against other drug manufacturers. Organon then reported the drug’s full cost when it sought reimbursements from the Medicaid programs in multiple states, the plaintiffs alleged.

Washington D.C. and every state in the nation except Arizona were involved in the complaint.

In addition to underpaying Medicare rebates, misrepresenting drug prices, and offering improper financial incentives to nursing home pharmacy companies, the states also claimed Organon promoted Remeron for unapproved, off-label use in treating children and teens.

“Preserving the integrity of our Medicaid Program and weeding out those who seek to defraud it is a top priority for my office,” New York Attorney General Schneiderman said in a statement. “We will keep fighting to ensure that companies that skirt the law for financial gain will be held accountable.” New York was one of the plaintiffs in the case against Organon.

The case stems from lawsuits filed by two whistleblowers under the False Claims Act in November 2007. One of those qui tam lawsuits, filed in Massachusetts, sought $421 million in damages from Organon and nursing home pharmacy companies Omnicare Inc. and PharMerica Inc. However, a federal judge dismissed a giant portion of the local, state, and federal claims saying that the whistleblowers hadn’t provided sufficient evidence that Organon engaged in an illegal kickback scheme.