Attorney General Suthers Announces Merck Settlement

DENVER – Colorado Attorney General John W. Suthers today announced that the State of Colorado will receive more than $1.7 million as part of two separate global settlements with Merck & Co., Inc., totaling $649 million.

Merck is the manufacturer of the drugs Zocor (lowers cholesterol), Vioxx (arthritis treatment), and Pepcid (heartburn aid). The agreements with Merck resolve allegations that the company failed to pay full rebates to state Medicaid programs under the Federal Medicaid Drug Rebate statute. The settlements also resolve claims filed by whistleblowers in Pennsylvania, Nevada, and Louisiana.

“These funds are a significant recovery for Colorado healthcare,” commented Attorney General Suthers. “This case should send a message to other pharmaceutical manufacturers that Colorado will not tolerate companies that fail to make full rebate payments.”

The State of Colorado pays over $3.2 billion each year for the medical care of 393,000 qualified recipients. Pharmaceutical manufacturers are required by federal law to give the same prices to state Medicaid programs as they give to their best customers, so that the states never pay more than a private distributor. When a state Medicaid program pays more than the best possible price, the manufacturers are required to issue a rebate for the difference. 

The states alleged that Merck would provide lower, discount rates to large hospitals than they would provide to Medicaid programs. The government contended that those discount programs required Merck to adjust its best price, and thereby issue larger rebates to the states.

The settlements involved 49 states, the District of Columbia, and the federal government. The Colorado Attorney General’s Medicaid Fraud Control Unit facilitated the State’s portion of the settlement. In addition to the monetary recovery, Merck has entered into a Corporate Integrity Agreement with the federal government. The agreement will ensure that Merck will market, sell, and promote its products in accordance with all Federal healthcare program requirements. It should be noted, Merck began voluntary compliance initiatives prior to learning of the government’s investigation that led to these settlements.

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