Schering-Plough to Pay $435 Million in Probe

Forbes.com reported today that pharmaceutical giant Schering-Plough, the maker of Claritin agreed to pay $435 million (talk about sunk costs!) and plead guilty to conspiracy to settle a federal investigation. The corporation has been charged with overcharging Medicaid for drugs as well as marketing them for unapproved uses.

Previously, Schering-Plough paid $346 million to settle charges that it paid bribed an insurance company in order to protect the market for its product, Claritin. Other charges and allegations that the company has been faced with include:

· 2 separate accounts of selling different cancer-fighting drugs for uses which had not been approved by the FDA.
· The sales department determining which doctors received grants to run continuing medical education programs (presumably based on which physicians used their products).
· Providing false data to the government’s Health Care Finance Association about the price of Claritin Redi Tabs © to secure that HMO’s business, as well as attempting to supply them with free drugs.

Part of the settlement includes a stipulation that the company adds a section to their corporate integrity agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services, which will require Schering-Plough to monitor their marketing and drug pricing in the future, as well as make amends for their past manipulations.

Incidentally, Schering-Plough has 32,000 employees worldwide and makes approximately 9.5 Billion dollars annually. After the settlement was made known, their stock rose 41 cents (2 percent) on the New York Stock Exchange.

Should the government be allowed to interfere to this degree in a free market economy, if the general public is not aware of a corporation’s abuse of its position? Would this be possible in a laissez-faire system? Are the penalties they impose even effective, if a corporation is as wealthy as this one? What if the cancer fighting drugs really do save lives- does the FDA have the right to deny patients’ a chance to survive? Does this take away individual choice? And, perhaps most importantly, is it coincidence that after being charged with a lawsuit, the companies stock prices jumped? What does this say about the American economy?