Netherlands-Based Organon, Inc. Settles Healthcare Fraud Claims for $34 Million

The False Claims Act is not limited only to domestic instances of fraud against the government. To the contrary, companies headquartered in other countries are routinely targeted for fraud investigations, including a recent False Claims Act case against a Netherlands-based drug company now owned by the more familiar corporation Merck. Allegedly, Organon, Inc., which is headquartered in the city of Oss, was engaging in various violations of the False Claims Act – and was unsuccessful in shielding itself from liability under the American law.

Details of Allegations Against Organon

Organon recently paid $34 million to the federal government to settle claims it engaged in the unlawful withholding of valuable rebates that should have been payable to the American Medicaid system. According to the details of two whistleblower lawsuits filed against the corporation, it allegedly did not include these rebates and discounts when offering its “best price” for drugs to the federal- and state-run Medicaid programs. Under the contract terms as applied to Medicaid providers, companies like Organon are required to offer the government their best possible price for drugs or supplies, including any discounts offered to the general public.

According to the whistleblowers, Organon failed to adhere to this requirement, and routinely offered nursing home pharmacy companies “market share discounts and rebates” in order to encourage the use of its drugs Remeron and Remeron SolTab as opposed to comparable antidepressants marketed by other drug companies. These discounts and rebates were not offered to Medicaid, and it paid full price for the products in violation of the federal Medicaid Drug Rebate Program.

In addition, the government has alleged that Organon promoted its Remeron and Remeron SolTab products for medical conditions that were not approved by the American Food and Drug Administration (FDA). This is called “off-label marketing” and can sometimes give rise to False Claims Act liability if the targeted patients are recipients of government healthcare benefits. In the case against Organon, the relators allege that the company not only marketed its side effects as “possible benefits,” but recommended the product for use in children and adolescents – which was not approved by the FDA.

Government’s Response

Being that Medicaid is a dual federal- and state-run program, the state of New York was involved in the settlement alongside the Department of Justice. In a statement, New York Attorney General Eric Schneiderman said:

“Preserving the integrity of our Medicaid Program and weeding out those who seek to defraud it is a top priority for my office….[We] will keep fighting to ensure that companies that skirt the law for financial gain will be held accountable.”

Lawsuits were also filed by authorities in Texas and Massachusetts. The settlement with Organon resolves 4 separate lawsuits.

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