Wednesday, December 21, 2011

Legacy Schering-Plough Company Incurs Largest "Single-Case" Medi-Fraud Fine In Massachusetts History

And so, the legacy albuterol matter ends (in Massachusetts, at least -- but Wisconsin, and other states still retain their individual claims, here), leaving Ken Frazier holding yet another bad I.O.U. note, from Fred Hassan and crew. His band of merry elves (payout artists) escaped with some $400 to $500 million in change of control and separation benefits, as the top six busted up Schering-Plough, and sold it off (essentially in pieces) to Whitehouse Station, in Novemeber of 2009.

From this morning's online version of the Boston Globe, called (with a gracious hat tip, to Ed, at Pharmalot), here's a bit:

. . . .Massachusetts recovers $24 million from Merck, in its largest Medicaid fraud settlement ever. . . .

The state previously recovered a total of $23.4 million from the other 12 companies involved, but Merck, the nation’s second-largest drug maker, appealed a US District Court ruling last year in favor of the state. Its decision to settle brings the entire case to a close. . . . The state could have accepted $1.5 million to $2 million two years ago as part of a settlement of a related federal case against Merck, but it chose to press its own case against the Whitehouse Station, N.J., company. . . . Initially, the suit named Warrick Pharmaceuticals Corp., a generic drug unit of the former Schering-Plough Corp.; it was bought by Merck for $41 billion in 2009. . . .

Since 2007, the attorney general’s office has returned more than $210 million to the state Medicaid program through fraud settlements. . . .

Yet another parting "White Elephant failed-bust-up gift", courtesy of that impish elf, and Ex-CEO, Fast Freddy Hassan. Sheesh. [Remember here that Hassan and Co. had proposed a highly structured animal health deal that ultimately had to be unwound, in early 2011 -- as it was almost universally found to be too likely to violate relevant US and EU antitrust laws.] Where were we? Oh yes.

Still it is true (on the main topic) that, at one point, the Massachusetts AG thought it could recover up to $250 million from Merck, for this (alleged) Warrick malfeasance. So, this isn't the top of the range, in settlement, by any means.


Anonymous said...

How did you miss reporting on one of Fast Freddy's SGP Board appointments? See

Condor said...

I gather that Celgene is a nominal defendant (in the lawsuit against the Sloan-Kettering CEO), and thus Carrie Cox (in her role as a Celgene director) would be connected, at least marginally.

If memory serves, though -- Fred Hassan is not on the board of Celgene, and is not on Sloan Kettering's board, either -- as near as I can tell.

Is it the long-prior Warburg Pincus funding of Celgene (and Fred's seat at Warburg) to which you refer?

I am confused. And -- to be sure -- I may just be missing something obvious.


Anonymous said...

Sorry I wasn't clear. I didn't mean to infer that Fred was directly involved in the substance of the issue in this article. I was referring to the apparent integrity question about Dr. Thompson--who was selected to join the SGP board (and I believe continues on the MRK board) by Fred very soon after he assumed the throne.

Condor said...

Right you are. I forgot that Thompson was a legacy Schering-Plough board member (and one of only three people -- of 12 -- that was asked to join the "New" Merck board). [The others were Patricia Russo (GM, while in bankruptcy); and C. Robert Kidder, the Chrysler guy. Huh -- both automaking connects -- odd.]

In any event, as to Dr. Thompson at Sloan-Kettering, I should note that -- at least in theory -- Merck's new bylaw provision on indemnity would allow (but not require) the Merck board to pay the expenses of Dr. Thompson's defense -- in the U. of Penn. v. Sloan-Kettering case, if the board were to determine that Merck actually derived benefit from Dr. Thompson's service at Sloan-Kettering (i.e., enhanced customer relations, in Merck's oncology franchises, due to his connections there).

I didn't really discuss that part of the new indemnity, but it is certainly in the bylaws, as amended.

I would hope that Merck would not even consider such an action -- but as is often the case, the truth turns out to be far stranger than any fiction we could imagine.

Thanks for the clarification -- and have a safe holiday!