A Court Ruling Against Merck May Also Hurt Pfizer

In a setback for Merck, a federal judge refused to dismiss a whistleblower lawsuit that accuses the drugmaker of distorting so-called nominal pricing in order to build a huge customer base for its Nuvaring contraception device and three contraceptive pills. The lawsuit, which was filed by two former employees, also claims the drugmaker offered kickbacks to physicians in exchange for prescribing a cancer medication. At issue is an alleged scheme in which Organon – which Merck (MRK) inherited as part of its 2009 purchase of Schering-Plough – offered a steep discount to Planned Parenthood for its contraceptive products, but in fact, reported this as a nominal price to government programs. In doing so, Organon hoped that young women who used its products would become paying customers later through private insurance, a tactic described in the lawsuit as a spillover effect. By way of background, the Medicaid Rebate Statute requires drugmakers to report their ‘best prices’ and other pricing info to the federal government in order to ensure Medicaid obtains the same discounts and concessions given other customers. An exception to this rule allows drugmakers to exclude from the prices they report any discounted prices that are ‘nominal’ in amount. Organon allegedly excluded those nominal prices from its reports. By reporting the discount at a nominal price, Organon concealed that sales were actually contingent on Planned Parenthood buying 360,000 Nu...
Source: Pharmalot - Category: Pharma Commentators Authors: Tags: Uncategorized Birth Control Pills Contraception Contraceptives Medicaid Merck Nuvaring Organon Pfizer Planned Parentood Schering Plough Wyeth Source Type: blogs