PHARMACEUTICAL INDUSTRY U.S. joins lawsuits against Merck unit

PHILADELPHIA (AP) -- Federal prosecutors said Monday that a company that was supposed to help health plans find low-cost prescription drugs instead pressured doctors to switch patients to medications made by its owner, pharmaceutical giant Merck & amp; Co.
U.S. Attorney Patrick Meehan said his office has joined a pair of civil whistle-blower lawsuits against Medco Health Solutions, accusing the Merck subsidiary of providing misleading information to the government in connection with its contract to manage drug benefits for federal employees.
More than 1,000 companies have hired Medco to coordinate prescription drug coverage for employee health plans, making it the nation's largest manager of pharmacy benefits, and the company is supposed to use its bulk-purchasing power to lower drug costs.
Switching operation
But the suits say Medco also operates a huge sales operation aimed at switching patients to Merck drugs, even if they have been doing well on another medication that costs less.
The three whistle-blowers -- a New Jersey doctor and two Nevada pharmacists who once worked for Medco -- allege the company also misled clients about its practice of accepting cash rebates from pharmaceutical companies in exchange for promoting their products. The suits claim the payments amount to kickbacks.
Medco spokesman Jeffrey Simek said the charges are "either absolutely untrue, or they reflect years-old isolated issues that were identified and corrected."
He denied that the firm gives preferential treatment to Merck, or any other drug company.
"Our policy is that we will never make a drug interchange that will not result in a benefit for either our clients, or the members of their health plans," he said. "If we improperly favored any drug by any single company, we could never succeed."
Other suits, investigations
Several health plans have already sued Medco, but Monday's filing by the U.S. Attorney in Philadelphia is the first such action by a federal prosecutor. Attorneys general in several states have said they are also investigating whether the company, and other pharmacy benefit firms, broke the law.
Medco, like other pharmacy benefit companies, acknowledges participating in rebate programs. Simek said the company took in $2.5 billion in rebates in 2001. But he said the payments work like coupons and ultimately lower medication costs for clients.
Court filings identified the whistle-blowers as Dr. Joseph Piacentile, of New Jersey, and George Bradford Hunt and Walter W. Gauger, two Nevada pharmacists who previously worked for Medco in Las Vegas.
The suits also accuse the Franklin Lakes, N.J., company of a variety of infractions at its mail order centers, including sending patients fewer pills than they paid for and destroying drug orders on days when sales volume was heavy to avoid penalties for not filling prescriptions on time.
"I think people would be infuriated if they knew a drug order that they had submitted had been purposely deleted, or delayed," Meehan said. "Our interest is in protecting the integrity of the system."
Simek said the company investigated the allegations and determined they were isolated incidents that didn't affect patient care. Two employees were fired, he said.
Spinoff attempt
Merck, which closed at $62.11, down 78 cents on the New York Stock Exchange, has been trying to spin off its Medco business. It canceled an initial public offering for the company in July after revealing that it had misstated its revenues by $12 billion. Merck said in May that the firm would be spun off instead to Merck shareholders.