Two federal agencies are probing drugmaker Merck to see if has violated anti-bribery laws in multiple foreign countries. Merck, the world’s second-biggest drugmaker by revenue, has received inquiry letters from both the Department of Justice and the Securities and Exchange Commission. The letters “seek information about activities in a number of countries and reference the Foreign Corrupt Practices Act,” according to Merck. The Act bars U.S. companies from bribing government or corporate officials in other countries to win business, among other things.
Merck and most other large pharmaceutical companies for the past couple years have been in tough competition for sales in emerging markets including China, Russia, India and Brazil. Government health programs in such countries often control the prices allowed for prescription drugs and decide which brands they will buy for millions of hospital and other patients. It’s being reported that the drug industry views high-volume sales in emerging markets as its best hope for growth. Companies have been adding thousands of salespeople and building factories staffed by low-paid workers in those countries.
Merck has a history of trouble regarding promotion of its products. Our firm was heavily involved in the Vioxx litigation that resulted in Merck paying out $4.85 billion to settle roughly 50,000 lawsuits brought by patients or survivors of people who took the painkiller. As we know all too well, Merck downplayed Vioxx’s dangers and misled both the FDA and the public about Vioxx. We know that Vioxx actually doubled the risk of heart attacks and strokes, including fatal ones. Currently, Merck is operating under a Corporate Integrity Agreement with the U.S. government covering its promotional practices and price reporting. The agreement runs through February 2013 and is similar to two earlier, five-year corporate integrity agreements with the U.S. Department of Health and Human Services Office of Inspector General.
The agreements in general all require Merck and its Schering-Plough unit to maintain an ethics training program, as well as “policies and procedures governing promotional practices” and reporting of prices for its drugs to the Medicaid health program. Merck bought Schering-Plough for $41 billion last November.
Medicaid is entitled to the lowest discount Merck, or any drugmaker, gives to other customers, such as hospitals or prescription benefit managers. Major drugmakers have repeatedly been investigated for allegedly overcharging Medicaid by reporting inflated drug prices to the government. That’s resulted in numerous multimillion-dollar settlements paid by the pharmaceutical companies.
Source: USA Today
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