ParfumGigi@aol.com

DENISE LAVOIE

Associated Press

BOSTON - Schering Sales Corp. and its parent company were sentenced to pay $435 million Wednesday as part of a settlement with the Justice Department over accusations it improperly marketed drugs for unapproved uses and lied to the government about drug prices.

Under a settlement announced in August, Schering Sales pleaded guilty to conspiracy and agreed to pay a criminal fine of $180 million. Its parent company, Schering-Plough Corp., agreed to pay another $255 million to resolve civil aspects of the case.

The sentencing closes the loop on an investigation by the Justice Department and the U.S. Attorney's Office in Boston that began in 2001.

Investigators said Schering-Plough marketed drugs for uses that had not been approved by the Food & Drug Administration. One example was Temodar, a drug the FDA had approved to treat a type of brain tumor called anaplastic astrocytoma. Prosecutors said Schering promoted Temodar to treat several other types of brain cancer, which the FDA had not approved. The company also promoted the unapproved use of Intron A for the treatment of cancer on the surface of the bladder, prosecutors said.

Although doctors are allowed to prescribe drugs for unapproved uses, drug companies are prohibited from marketing drugs for these so-called "off-label" uses.

Brien O'Connor, an attorney for Schering, said the company never lied to doctors about the uses the drugs had been approved for, but simply spoke to doctors and gave them peer-reviewed articles about other uses for the drugs.

"We told the truth about Temodar and Intron, and we didn't mislead the doctors," O'Connor said after the sentencing.

U.S. District Judge Patti Saris scolded Schering and the entire pharmaceutical industry for promoting non-FDA approved uses for drugs. She noted that several other major drug companies have also been fined for illegal marketing, including Pfizer Inc., which in 2004 agreed to pay $430 million on allegations that Warner-Lambert, which Pfizer acquired in 2000, promoted non-approved uses of the anti-seizure drug Neurontin.

"You cannot thumb your nose at the FDA," Saris said. "At the end of the day, you can't market off-label. ... It's wrong."

Thomas Sabatino Jr., general counsel for Schering-Plough, said that after a new management team took over the company in 2003, the company put a strict compliance program in place, including training all employees on its code of conduct and putting a compliance officer in each of its business units.

"We have a clear focus on business integrity, compliance, and honestly, doing the right thing," Sabatino said.

As part of the settlement, the company pleaded guilty to making false statements to the FDA and the Health Care Financing Administration.

Prosecutors said Schering-Plough, based in Kenilworth, N.J., reported a false best price to the Health Care Financing Administration on Claritin RediTabs to avoid paying millions of dollars in rebates to Medicaid. Under Medicaid rules, pharmaceutical companies must provide their products at the best price made available to commercial buyers, including HMOs.

Shares of Schering-Plough gained 13 cents, or 0.5 percent, to close at $24.52 on the New York Stock Exchange.