[JURIST] New Jersey pharmaceutical manufacturer Merck [corporate website] has agreed to pay $671 million to settle claims [press release, PDF] that it defrauded Medicaid and improperly marketed three of its drugs to doctors, federal prosecutors said Thursday. The settlement [PDF text] stems from two separate lawsuits filed in Philadelphia and New Orleans. The Philadelphia case alleged that Merck overcharged the federal Medicaid program by failing to disclose that it was offering drugs to hospitals at deep discounts. The New Orleans suit alleged that Merck offered deep discounts on the drug Pepcid [product website] if hospitals agreed to use their product instead of those manufactured by competitors. The settlement also required Merck to enter into a Corporate Integrity Agreement [PDF text] with the Office of the Inspector General and the Department of Health and Human Services to ensure company-wide compliance with federal rules and regulations concerning the production, marketing, and sale of pharmaceutical drugs.

US Attorney General Michael Mukasey applauded the settlement [press release], saying that it reflects the government's continued efforts to hold drug companies responsible for the sale and marketing of their products. Merck stressed [press release] that the settlement was not an admission of guilt or liability, and that the company was confident that it had complied with federal regulations. AP has more.