Merck & Co's $671M rebate settlement

US pharmaceutical major Merck & Co says that it has reached civil settlements with federal and state authorities to resolve longstanding investigations related to disputes over the proper calculation of Medicaid rebates on several of its drugs, as well as certain past sales and marketing activities that ended in 2001. Under the terms of the deal, the drugmaker will pay out a total of around $671.0 million.

The settlements do not constitute an admission by Merck of any liability or wrongdoing, and the firm says it believes its pricing and sales and marketing policies and practices were consistent with all applicable regulations and contracts during the relevant time.

This civil resolution encompasses two matters involving the federal government, the District of Columbia and all 49 states that participate in the Medicaid prescription drug program. In the first matter that was pending in the Eastern District of Louisiana, Merck has agreed to pay $250.0 million plus interest. In the second, in the Eastern District of Pennsylvania, which includes a related Nevada action, the firm has accepted paying $399.0 million plus interest. Merck announced last December that it would take a $670.0 million charge in the fourth quarter of 2007 in anticipation of these two settlements.