- The Washington Times - Wednesday, August 14, 2002

The Justice Department is investigating charges of price fixing at Wyeth and Schering-Plough Corp., two of the world's largest drug manufacturers, that reduced their broker fees by the same percentage on the same day last year.
The investigation is the latest in a series of federal probes of price fixing among pharmaceutical companies dating to the mid-1990s.
In the current probe, Justice Department officials said investigators are concerned that Wyeth and Schering-Plough offered some executives early retirement buyouts with confidentiality agreements that would bar their testimony in civil lawsuits against the companies.
Officials for Compass Marketing, a Maryland-based consumer products broker, said Wyeth fired them Friday. The firing will compound Compass' losses, which already total millions of dollars after Wyeth and Schering-Plough cut the broker's fees 3 percent to 4 percent on March 30, 2001, company officials said.
"It has been devastating to our business," said John White, vice president of business development at Compass. "We have been contacted by the Justice Department and the FBI, and a number of our employees have been interviewed, and we have been asked to produce documents.
"We are very concerned that it's associated with the investigation and part of a cover-up," said Mr. White, one of the owners of the company.
He said Compass Marketing is the largest supplier of consumer goods to "alternate channels" sellers other than mass retail in the United States. Offshore oil rigs, hotel convenience stores, cruise ships and golf shops make up much of its clientele.
Both Wyeth and Schering-Plough have said the fee reduction was part of an overall cutback in what they paid brokers.
Francis Sullivan, a spokesman for Wyeth Consumer Healthcare Products, said yesterday that he knew nothing about an investigation. Mr. Sullivan declined to say if any executives had taken early retirement or comment on its dealings with Compass Marketing.
Schering-Plough officials did not return calls seeking comment yesterday.
Wyeth's corporate campus in Madison, N.J., is near that of Schering-Plough's in Kenilworth, and some executives have worked at both pharmaceutical companies and have personal ties, said sources familiar with the investigation.
Schering-Plough products include Dr. Scholl's foot-care items, Coppertone sunscreens and the allergy drug Claritin.
Products by Wyeth, formerly American Home Products Corp. (AHP), include Anacin, Advil, Dimetapp, Robitussin and Centrum vitamins.
In February, AHP settled charges by the Federal Trade Commission that it had entered an anti-competitive agreement with Schering-Plough to delay the entry of a lower-cost generic drug into the U.S. market.
The FTC complaint charged that Schering-Plough, maker of K-Dur 20, a widely prescribed potassium chloride supplement, illegally paid AHP millions of dollars in exchange for an agreement to delay the sale of its generic K-Dur 20 version.
Last month, Schering-Plough reported that its second-quarter earnings were fairly flat because of manufacturing problems and slowing sales of Claritin. The allergy drug's patent is set to expire in December, and the drug maker has said it will appeal a court ruling to preserve its patent.
In May, Schering-Plough agreed to pay $500 million in fines, through a consent decree with the U.S. Food and Drug Administration, for manufacturing problems.
Federal investigators are looking into whether Schering-Plough used cheap chemicals not approved for use in the country to make prescription products at plants in Puerto Rico.
Meanwhile, Schering-Plough and a subsidiary are accused in a lawsuit of conspiring to overcharge Medicare for drugs, the company said in a U.S. Securities and Exchange Commission filing.
The suit, filed last month in California state court, says Schering-Plough's Warrick Pharmaceuticals unit conspired with other drug makers to report fraudulently high wholesale prices for prescription drugs covered by Medicare. The consumers who sued seek monetary damages and the return of any ill-gotten gains.
The Justice Department, the Department of Health and Human Services and various state attorneys general already are investigating whether Schering-Plough and other drug makers overcharge government health-insurance programs too much for drugs.
Schering-Plough is cooperating with those inquiries.
"The company believes it has substantial defenses to these claims and will defend itself vigorously," it said in its quarterly filing. "However, as with any litigation, there can be no assurance that the company will prevail."
The California consumer suit seeks class-action status. Schering-Plough already faces similar suits in Arizona and claims by the attorneys general of Texas, West Virginia, Nevada and Montana.

This article is based in part on wire service reports.

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