N.J. drugmaker pleads guilty to criminal charge, puts federal investigation to rest.
NEW YORK -- Schering-Plough said Tuesday it settled a criminal investigation into its sales practices and agreed to pay $435 million in fines and damages.
The New Jersey-based drugmaker said the agreement with the U.S. Attorney's Office for the District of Massachusetts and the Justice Department calls for it to pay a criminal fine of $180 million to settle the investigation into its sales, marketing and clinical trials.
Schering (up $0.16 to $20.57, Charts), the nation's no. 9 drugmaker, said it pleaded guilty to one count of conspiracy to make false statements to the government.
The company also agreed to pay $255 million "to resolve civil aspects of the investigation." Schering has set aside $500 million in litigation funds to cover these costs, which more than covers the total damages.
"We do take full responsibility for the actions of the past, but by that same token we're happy to put this behind us and focus on continuing to build the state of the art compliance program for the future to make sure these things don't happen again," Brent Saunders, senior vice president of global compliance and business practices, said to CNNMoney.com.
Saunders said criminal activity occurred before a new management team led by Fred Hassan came to the company in April 2003. Saunders was hired as part of this team in 2003, and said he heads the new compliance department to bring "business integrity into the DNA of the company."
Hassan is seen as a success story, partly because the company's stock price shot up 17 percent since his takeover, compared to the drug industry's paltry gain of 1 percent during the same period. But Schering has underperformed the S&P 500, which gained 46 percent during that time.
The settlement still has to be approved in court.
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