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Merck unit accused of bilking U.S. health plans

The U.S. Dept. of Justice has joined a whistleblower lawsuit that accuses Merck’s U.S. generic-drug unit, Dey, of overcharging Medicaid and Medicare.

The government’s complaint alleges that Dey reported prices that were more than five times the actual sales prices on many of the drugs it manufactures, causing the federal government to reimburse Dey’s customers in excess of $500 million for these drugs.

The difference between the inflated government reimbursement rates and the actual price paid by healthcare providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit or return on investment for the provider. The government alleges that Dey used artificially inflated spreads to market, promote and sell the drugs to existing and potential customers.

The Dept. of Justice press release was issued on September 11, 2006.

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