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MERCK PAYING $671-MILLION SETTLEMENT

The drugmaker will settle claims it overcharged the government and bribed doctors.

In one of the biggest U.S. health care fraud settlements ever, Merck & Co. will pay $671-million to settle claims it overcharged the government for four popular drugs and bribed doctors to prescribe its drugs, federal prosecutors said Thursday.

The alleged overcharges, dating to the mid 1990s, involved Medicaid programs in the District of Columbia and every state but Arizona, as well as federal health-insurance programs at agencies, including the Department of Defense and Veterans Administration.

Florida will receive $32.8-million of the Merck settlement, with the proceeds going to the state's Medicaid program.

A nationwide investigation by federal prosecutors, triggered in 2000 by a former Merck salesman-turned-whistleblower and broadened by a Louisiana doctor who also exposed overcharging, resulted in two settlements announced Thursday.

In Philadelphia, prosecutors said Merck agreed to pay $399-million for improper calculation of Medicaid rebates and bribing doctors. In New Orleans, prosecutors said the drugmaker agreed to pay $250-million for its rebate practices. With interest, that totals $671-million.

"Not only is the combined recovery in these two cases one of the largest health care fraud settlements ever achieved by the Justice Department, it reflects our continuing efforts to hold drug companies accountable for devising pricing schemes" that overcharge the government, said Attorney General Michael D. Mukasey.

Merck, based in Whitehouse Station, N.J., said the settlements do not constitute an admission of any liability or wrongdoing.

The whistleblower, former Merck salesman H. Dean Steinke, will get $67-million from the federal and state shares. Dr. William St. John LaCorte, the geriatrics specialist in Louisiana who also exposed overcharging, will receive a still-undetermined whistleblower reward.

Times staff writer Kris Hundley contributed to this report.

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