Merck opts to settle suits with $650 million payout

WHITEHOUSE STATION, N.J. Merck will pay more than $650 million to settle a variety of lawsuits related to past sales and marketing practices, according to The Wall Street Journal.

The major issue involved is a practice known as “nominal pricing,” which has appeared in a lawsuit filed by a former Merck employee and joined by the Justice Department and all states except Arizona. The settlement allocates $218 million to the federal government and $181 million to 49 states and the District of Columbia.

Merck also said it is paying $250 million to resolve a suit involving pricing of its heartburn drug Pepcid, filed in Louisiana by a local doctor and joined by the Justice Department and the same 49 states. In all, the company agreed to pay $649 million plus interest.

The nominal-pricing lawsuit concerns discounts on drugs supposedly offered to certain customers but not to Medicaid. The suit alleged Merck offered discounts of 90 percent or more on the cholesterol pills Zocor and Mevacor and the now-withdrawn painkiller Vioxx to hospitals that helped Merck achieve market-share goals, and that it improperly gave doctors incentives to use the products.

Federal law requires drug makers to give Medicaid the best price they offer any customer. But an exception says medicines sold at discounts of 90 percent or more don’t have to be disclosed or included in the best-price calculation. That steep discount was meant to let companies make inexpensive medicines available to charitable organizations.

The law doesn’t specifically say who can receive the special pricing. But regulators alleged Merck’s pricing for the hospitals didn’t qualify, because it came in exchange for their agreeing to sell certain volumes of Merck’s drug, at the expense of rival medications.