There is a law which states that drug companies must sell drugs to Medicaid at their the lowest price. It turns out the Merck was selling drugs to hospitals at a steeper discount than what they were giving to Medicaid. Merck will pay $399 million for overcharging in Philadelphia and $250 million for overcharging in Louisiana.
According to the New York Times (“$671 million“):
“Merck…was hiding the steep discounts it gave to hospitals by reporting higher prices to the government, prosecutors said.
From 1997 to 2001, Merck also gave money and perks to doctors and other health care professionals to entice them to prescribe Merck drugs, a practice the government called excessive.“