Drug Companies Paid Merck-Medco $3B in Late 1990s To Promote Drugs, Documents Allege
Medco Health Solutions, one of the nation's largest pharmacy benefit managers and a subsidiary of drug maker Merck, received more than $3 billion in rebates from pharmaceutical companies in the late 1990s to promote sales of certain products, according to documents filed by plaintiffs in a class-action lawsuit, the New York Times reports. According to the documents, Medco received about $3.56 billion in rebates in 1997, 1998 and 1999 as an incentive to promote some of the most expensive medications on the market. Medco convinced physicians to prescribe the treatments to patients "at the expense of similar medicines that often cost less," and it and "especially vigorously" promoted products manufactured by Merck, according to the documents, the Times reports. The documents are part of a class-action lawsuit filed in Federal District Court in White Plains, N.Y., on behalf of several employer health plans (Freudenheim, New York Times, 3/13). Last year, Merck agreed to pay $42.5 million to settle the lawsuit, which alleges that the company improperly promoted more expensive medications. Under the proposed settlement, Medco would admit no liability but would have to inform clients of changes to preferred treatment lists and when less expensive generic versions of medication become available. Medco also would have to reveal the prices and costs used to calculate discounts on medications. U.S. District Judge Charles Brieant must approve the settlement (Kaiser Daily Health Policy Report, 12/10/02). Brieant has not set a court date. Opponents have called the amount of the settlement "too small" compared to the large rebates Medco received from pharmaceutical companies that "should have been passed along" to clients and consumers, the Times reports.
Medco Response
Anita Kawatra, a spokesperson for Medco, said, "The level of rebates we share are negotiated with clients. They are clearly disclosed in our client agreements." Kawatra added that the preferred medication list that Medco uses and the company's programs to convince physicians to prescribe certain treatments "are approved by an independent committee of doctors and pharmacists and by our clients, who save money on the whole" (New York Times, 3/13).
