$670 Million False Claims Act Settlement from Merck Flying Under the Radar

I would like to take this opportunity to remind everyone that the False Claims Act is supposed to be a Whistleblower law. Something is strange when there’s a 670 Million Dollar settlement under this law and it’s actually pretty hard to find out what happened. (The only reports I could find were in the Corporate Crime Reporter and a paragraph five mention in this Associated Press article)

There’s a lot of good news in the fact that Merck had to pay this money, but we’ll have to wait for all the details because it seems many of the documents are still under seal. False Claims Act Plaintiffs always have a hard time adjusting to the idea that they have to keep their mouths shut to let the Government investigate their claims. In this case, the Government should be congratulated – they got a huge result. Yet one of the points of the law is to deter the type of behavior Merck engaged in, and it’s hard to see how keeping the results quiet does that.

We were able to find one court document, the Complaint filed in Nevada under that State’s False Claims Act. If that complaint can be believed, and there are 670 million reasons to give it credibility, Merck went about “increasing market share” as they call it, pretty much the way a drug pusher does. Only drug pushers don’t get the US taxpayer to underwrite sales.

The complaint filed in Nevada district court outlines a scheme to defraud the taxpayer. Merck essentially gave away their drugs, drugs for chronic conditions, to hospitals so that patients would be dependent on the prescription when they left the hospital. Then Merck charged higher prices when the patient left. Only problem is that by discounting drug away earlier they were supposed to report that as the new price of the drug and re-imburse the government accordingly. Ooops. You can’t say the pill is 10 cents in the hospital but costs 2 dollars when the patient leaves and get two dollars per pill from the government which pays the bills each time.

In a special irony, one of the drugs whose “market share” this scheme Improved was Vioxx. So now Merck has more Vioxx liability for that drug’s cardiac problems than if they marketed the drug legally. That would almost be funny if it didn’t put so many patients’ lives at risks.

Anyway, the US Department of Justice is to be congratulated for winning such a huge settlement. The Lawyers who won the case and certainly the Plaintiff who brought it have all earned their reward. I just wish that instead of keeping everything quiet everybody would do a little more bragging. Get all the documents out of seal and tell the world that the False Claims Act works to recover funds stolen from the government even in complex schemes. Let’s encourage the whistlebowers to report fraud as the False Claims Act was enacted to do. When you win $670 Million, its time to tell the world.


Exit mobile version