Tuesday, August 29, 2006

No Deferred Prosecution Agreement to Schering Sales Corporation

According to a press release of the US Attorney's Office in Boston here,

"Delaware corporation Schering-Plough Corporation, together with its subsidiary, Schering Sales Corporation have agreed to pay a total of $435,000,000 to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for its drugs Temodar for use in the treatment of brain tumors and metastases, and Intron A for use in treatment of superficial bladder cancer and hepatitis C. The resolution also pertains to Medicaid fraud involving Schering’s drugs Claritin RediTabs, a nonsedating antihistamine, and K-Dur, used in treating stomach conditions."

Deferred prosecution agreements may start looking better to some companies after seeing the ramifications of the criminal conviction to Schering Sales Corporation.  Schering Sales Corporation, by pleading guilty to a "one count criminal conspiracy to make false statements" will mean that the company is "excluded permanently from participation in all health care programs." Although The Wall Street Journal does note here that the company's "marketing functions have been taken over by other parts of the company, which are permitted to continue doing business with Medicaid and Medicare." (The Wall Street Jrl. article by Sylvia Pagán Westphal, Zachary M. Seward, and John Carreyrou, also provides other background information on this case)

The collateral consequences can sometimes be the strongest effect of a criminal conviction. When there is a possibility of license forfeiture, debarment, or program exclusion -- as seen here -- the effect of the conviction goes well beyond the actual guilty plea.

The DOJ press release does state that "[a]fter the activities were uncovered by the government, Schering-Plough cooperated with the investigation and actively worked on compliance issues through a significantly expanded compliance department."



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