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Drug company criminal charges { May 31 2003 }

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Copyright 2002 The International Herald Tribune |

Schering-Plough faces possible criminal charges
Compiled by Our Staff From Dispatches AP, Bloomberg
Saturday, May 31, 2003

Schering-Plough Corp., a U.S. drugmaker under investigation for its sales and marketing practices, said Friday it was being probed for destroying documents related to the inquiry and that prosecutors intended to seek a criminal indictment.

The U.S. attorney's office in Boston said in a letter Wednesday to the company that a federal grand jury was probing whether Schering-Plough sold misbranded medicines, submitted false pricing data or offered free samples to lure customers.

The attorney's office now is asking whether Schering-Plough obstructed justice, the company, based in Kenilworth, New Jersey, said in a statement.

"The company is continuing to cooperate with the U.S. attorney's office on this matter," a spokeswoman, Denise Foy, said.

Samantha Martin, spokeswoman for the U.S. attorney's office in Boston, said the office would neither confirm nor deny the investigation. Shares in Schering-Plough were down 33 cents, or 1.7 percent, at $18.57 in late trading on the New York Stock Exchange.

Schering-Plough had previously disclosed that federal prosecutors in Boston were probing its practices regarding sales, marketing and funding for testing of its medicines on people. The new letter from the U.S. attorney's office there stated that Schering-Plough was a target of a criminal investigation on four fronts. The company said those allegations were:

Providing remuneration to physicians, managed care organizations and others to induce purchase of its pharmaceutical products under federal health-care programs.

Selling drugs for conditions for which the Food and Drug Administration has not specifically approved use.

Giving the government false or incomplete wholesale pricing information on drugs, inflating prices paid for those drugs by the Medicaid program.

Destruction of documents and obstruction of justice relating to this investigation.

Schering-Plough said it had implemented "certain changes to its sales, marketing and clinical trial practices and is continuing to review those practices to ensure compliance with relevant laws and regulations."

It also said the U.S. attorney's office had advised the company that it would have an opportunity to submit evidence and legal arguments responding to the allegations.

In February, Schering-Plough added $150 million to its legal reserves because of the investigation, cutting fourth-quarter and 2002 profit. Last May, the company agreed to pay $500 million to settle U.S. regulators' complaints about production flaws that delayed approval of Clarinex, the successor to Claritin.

Copyright 2002 The International Herald Tribune

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