Back When The Current US Attorney General, Eric Holder, Was Merck's Lawyer. . . .

I have been meaning to upload the full-text PDF file (all 65 pages, and 3.8 Mb, of it) of Merck's Feruary 2008 Corporate Integrity Agreement -- an agreement that contains compliance obligations for Merck (and "New Merck") through February of 2013. [I should also mention, in passing, that Mr. Holder was a partner at Covington & Burling, at the time he represented Merck -- and that's the same Schering-Plough law firm that offered less than entirely responsive replies to a formal Congressional letter of inquiry, about ENHANCE study results disclosure delays -- in April of 2008 -- click image, at right, to enlarge.]

The Merck settlement agreement may be extended, should evidence of additional corporate wrongdoing occur (or it may be revoked altogether, and a proceeding instituted by the DoJ's Health-Care Fraud unit, reinstated). In passing, I noticed that Eric Holder (yes, the current Attorney General) signed this agreement, back in 2008, as one of Merck's retained lawyers against the DoJ.

And so, he will obviously have to be "Chinese Walled-off" from any substantive decisions related to Merck's compliance with this corporate integrity agreement, under the applicable conflict of interest rules. That's a good thing -- as even though I have the utmost confidence in his personal integrity, it will assure -- with certainty -- that only the hard-working, very able career US Attorneys (and likely the ones who handled the original Merck matter) will make these "balls and strikes" calls, from now until Feberuary 2013. Here is what caused the agreement to spring into existence; and here is the full 65-page document (3.8 Mb PDF file):

. . . .The Medicaid Rebate Statute requires that drug manufacturers report their “best prices” and other cost information to the government in order to ensure that Medicaid obtains the benefit of the same discounts and price concessions that other purchasers enjoy. An exception to this rule allows manufacturers to exclude from the prices they report any discounted prices that are “nominal” in amount. Merck improperly termed as “nominal” the prices it offered to hospitals to boost their sales and excluded those discounts from the prices it reported to the government.

Steinke’s suit further alleged that from 1997-2001, Merck had approximately fifteen different programs used by its sales representatives to induce physicians to use its many products. These programs primarily consisted of excess payments to physicians that were disguised as fees paid to them for “training,” “consultation” or “market research.” In fact, the government alleged that these fees were illegal kickbacks intended to induce the purchase of Merck products. Merck agreed [on February 7, 2008] to pay $399 million plus interest to settle the Medicaid Rebate as well as the kickback allegations.

In a separate suit filed by physician William St. John LaCorte in New Orleans, it’s alleged that Merck had established a marketing scheme in which it provided substantially reduced prices for its Pepcid products once the hospitals agreed to primarily use the drug instead of a competitor’s. (Pepcid is used to reduce stomach acid and to treat heartburn and acid reflux.) Merck allegedly offered these incentives to hospitals in order to obtain the benefit of spillover business when a patient would continue to purchase Pepcid once he or she was discharged. Merck improperly termed as “nominal” the prices it offered to hospitals to boost the sales of Pepcid, excluded those discounts from the prices it reported to the government, and thus effectively denied the government the benefit of these lower prices. Merck agreed. . . to pay $250 million plus interest to settle these allegations.

Under the two settlement agreements, the federal government will receive more than $360 million, and forty-nine states and the District of Columbia over $290 million. In addition, Mr. Steinke will receive $44,690,000 from the federal share of the settlement amount and an additional $23.5 million from the states. Similarly, Dr. LaCorte will receive a share of the proceeds from the federal and state settlement amounts under their respective qui tam statutes. . . .

I'll keep an eye on this one, and update, as any developments warrant. Those Covington & Burling lawyers sure do get around, though, don't they?