Attorney General's News Release

October 31, 2008

Nixon obtains record $31 million settlement for Missouri taxpayers from pharmaceutical giant Schering-Plough

St. Louis, Mo. - A pharmaceutical company sued by Attorney General Jay Nixon in 2005 over price fraud allegations will pay a record $31 million to the state of Missouri. Nixon today (Oct. 31) reached a settlement with Schering-Plough to resolve allegations that a scheme by its Warrick Pharmaceuticals Corp. division inflated the corporation's prices in a way that cost Missouri taxpayers millions of dollars. The settlement is the largest amount the State of Missouri has ever obtained in a legal case against a pharmaceutical company.

The settlement comes at the end of a two-week trial in St. Louis City Circuit Court in which attorneys from Nixon's office had already established the corporation's liability in the case and the jury had found that Schering-Plough owed $7.3 million in compensatory damages. The $31 million settlement resolves Missouri's claims, and brings the total recovered by Nixon from his original lawsuit against Schering-Plough and another defendant drug company, Dey Inc., to almost $34 million.

"This is a tremendous day for Missouri taxpayers in the fight against fraud by pharmaceutical companies," Nixon said. "I am very proud of the attorneys and other staff in my office who worked so diligently for more than three years to obtain this result. We will continue to be aggressive on behalf of the people of Missouri."

Nixon filed a lawsuit against Schering-Plough in May 2005, alleging the company did not accurately report the prices of drugs sold to pharmacies participating in the Missouri Medicaid program. The prices reported to pharmaceutical trade publications - referred to as average wholesale price (AWP) or wholesale acquisition cost (WAC) - often were substantially higher than the prices actually paid by the provider for the drugs, which were primarily generic brand inhalants used by patients with respiratory conditions.

Nixon reached a settlement with Dey in April 2006 in which the company agreed to pay $2,932,000 to the state of Missouri to resolve the Attorney General's lawsuit.

Nixon has lawsuits pending against several other pharmaceutical companies alleging similar schemes. Those companies include:

• Mylan Laboratories Inc. and its subsidiary, Mylan Pharmaceuticals Inc.;
• Teva Pharmaceuticals USA Inc.; its parent company, Teva Pharmaceutical Industries Ltd.; and Novopharm, a subsidiary of Teva Pharmaceuticals;
• Watson Pharmaceuticals Inc. and its subsidiary Watson Pharma Inc.;
• Boehringer Ingelheim Roxane Inc.; its parent company Boehringer Ingelheim Corp.; and four related companies.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Communications Office.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818