Home > Free Essays > Business > Case Study > United States v Merck Medco
5 min
Cite this

United States v Merck Medco Case Study


The parties in the case involve the United States government and Medco Health Solutions, which is an international company that offers medical services. The government side has a number of parties, including the department of Justice. Specifically, the department of Justice represents the Inspector General in charge of Health and Human services. This shows that the department of Justice is the American institution charged with the responsibility of ensuring that sanity is upheld in society.

The office of personnel management is also mentioned as the party in the case. The department of Justice in the case represents the personnel office. The government side is the complainant while Medco Solutions is the accused. On the accused side, Diane Collins, George Bradfort, William Gauger and Joseph Piacentile are mentioned as parties.


There are many facts in the case involving the United States government and Merck-Medco Solutions. One is that Medco is a company that prescribes treatment to patients. It offers pharmacy services to employees in both private and public sector. Medco company runs mail order pharmacies and call centers that are licensed by individual states and other bureaucratic institutions. The company conscribes employees that are approved by the government to exercise their professions.

The company offers mail order treatments and allied benefit services to federal workers, retirees and their dependents (Showalter, 2007). Medco Company entered into various agreements with state agencies such as Federal Employees Health Benefits Program. Medco is a product of a merger between Merck Company and Medco RX Services Company. Therefore, in this, the word ‘Medco’ represents all its subsidiaries, forerunners and descendants.

Another actuality is that Collins was the deputy president and general manager of Merck-Medco RX Services from early 1999 to early 2001. Furthermore, Bradford and Gauger are specialized pharmacists who were conscribed by Medco Company before 1999. On May 6, 1999, Hunt and Gauger filed a qui tam action in the district court. On February 10, 2000, Piacentile filed another qui tam in the same court. Hunt and Gauger qui tam and Peacentile qui tam were merged into a single case. The two cases form the basis of this case.

Moreover, it is a fact that the United States asserted that Medco and defendant Collins presented claims for payment of funds into various government financed health care plans including Blue Cross Shield Association and the Government Employees Hospital Association. Again, the United States government asserted that it had some civil claims against Medco Company and Collins. The government disputed that Medco Company had breached the contract by going against state pharmacy policies and rules (Showalter, 2007).

Furthermore, the company had contravened the pharmaceutical codes of ethics. Medco Company failed to fulfill its contractual performance accords by failing to testify its performance accurately under Federal Plan policies. The government confirmed that Medco Company failed to convene its responsibilities by suggesting bogus payments. On the other hand, the company used false credentials to lessen legal responsibilities.

This was done by annulling instructions for which no evidence existed in Medco’s management Database. Again, the company called off prescriptions without a legitimate explanation. It is factual that the company gave out prescriptions without accurately carrying out DUR test and without aptly contacting prescribers.

It is a reality that Medco Company utilized the services of under qualified technicians to carry out functions that are legally preserved for experts. Such functions must always be performed by an expert in the field of pharmacy or must be supervised by a pharmacist. Such mistakes included arbitrating and giving prescriptions to patients without being assessed or directed by a qualified pharmacist.


The criticisms in this case were filed under the federal false claims act and state false claims acts against Medco Health Solutions. The cases assumed that Merck and Medco analytically deceived government-funded health indemnity plans by tolerating bribes in exchange for referring patients to particular goods, furtively tolerating rebates from medicine producers in exchange for rising the market share of goods, surreptitiously rising long-standing medicine expenses and failing to conform to state-mandated reputation of care values.

This was conducted in a number of ways. One of the ways included requesting general practitioners to change patient prescriptions (drug substitution) by offering deceptive, bogus or imperfect information that undermined the integrity of patients.

The managers were only concerned about profits. Another technique employed was secretively rising the price of drugs offered to recipients by intentionally interchanging patients’ prescriptions to stop them from taking advantage of soon to be produced standard drugs. Lastly, the company was accused of defying fundamental state obligations governing pharmacist regulation of drug execution procedures.

Through such behavior, the United States assumed that Merck and Medco dishonored their agreements with government-funded health indemnity plans (Showalter, 2007). These cases were revealed by whistleblowers in support of the United States government. On June 20, 2003, the United States interceded in the case following a widespread examination of realistic accusations and evidentiary support offered by parties.

This study was performed by several national organizations, including the Office of Inspector General of the Department of Health and Human Services, the Defense Criminal Investigative Service, the U.S. Attorney’s Office, the Office of Inspector General of the Office of Personnel Management, and the Eastern District of Pennsylvania. On December 9, 2003, the United States modified the case by adding two administrators of Medco as defendants.

In the modified case, these managers were blamed for hiding deliberate obliteration of patient treatment, annihilating and ordering the demolition of patient prescriptions and giving confusing reports concerning the conspiracy when interrogated by the Department of Justice.

The modified case also added another case, which was the violation of the law as regards to Public Contract Anti-Kickback Act for making shocking payments to health programs to persuade them to choose Medco as a pharmacy benefit director for government indentures.


In this case, the court decided that Merck-Medco’s conformity programs were either fictional or inadequate in approval of the irresponsible obligations mentioned. The conclusion did not clarify the extent of the Merck-Medco observance plan but the Court evidently concluded that the company presented bogus claims in thoughtless disrespect of their falsity.

The resolution did not state that the top executives had any authentic information that the claims presented by Merck-Medco were bogus, but it surmised that the observance plan that was in place at Merck-Medco was obviously not enough to identify and stop the false assertions (McClellan, 2010).

Obviously, the Government was not in a position to prove overwhelmingly that managers and bosses of the corporation had concrete data as regards to the supposed counterfeit statement or satisfactory participation in the billing procedure to have irresponsible disregard or intentional unawareness of the bogus claims presented to Blue Cross and Blue Shield.

In this case, the court ruled that Medco Company had contravened the law and had bridged the contract. The company had no option but to pay the government a huge amount of money as compensation for damages.

Effects on healthcare

The Merck-Medco case is the first that an outworker has been pronounced for violating criminal law in part since the observance plan was imperfect and inadequate. Consequently, a number of proposals aimed at intensifying the conformity program have been put forward. Firstly, any healthcare company should set up and circulate a code of conduct in the company as fast as possible if it is not yet publicized (Tauber, 2005).

The administrator agreement must be designed to serve as a top observer with unswerving task for all conformity actions (Showalter, 2007). The person in charge must have direct admission to the CEO and the Board of Directors. Compliance manager must be given power, authority to separately investigate and act on issues related to law, and policies that oblige the corporation to operate or not operate in particular ways.

Furthermore, all workers in the healthcare sector must be educated about the existence and the particulars of the company’s observance plan. To do this, normal reports, at least weekly, should be issued to the Board of Directors as regards to any interior surveys (Tauber, 2005).

Managers in the healthcare organizations should set up episodic interior reviews and institute techniques for supervising observance and incessantly examining the hotline system for detecting contraventions. Furthermore, reporters must be guaranteed of their security. Finally, the organization should set off any interior inquiry based on plausible information regarding reported crimes.


McClellan, M. (2010). A National Strategy to put Accountable Care into Practice. Health Affairs, 29(5).

Showalter, S. (2007). The Law of Healthcare Administration (5th ed.) New York: Health Administration Press.

Tauber, A. (2005). Patient Autonomy and the Ethics of Responsibility. Cambridge: MIT Press.

This case study on United States v Merck Medco was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.
Removal Request
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda.
Request the removal

Need a custom Case Study sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

certified writers online

Cite This paper

Select a website citation style:


IvyPanda. (2019, December 6). United States v Merck Medco. Retrieved from https://ivypanda.com/essays/united-states-v-merck-medco/

Work Cited

"United States v Merck Medco." IvyPanda, 6 Dec. 2019, ivypanda.com/essays/united-states-v-merck-medco/.

1. IvyPanda. "United States v Merck Medco." December 6, 2019. https://ivypanda.com/essays/united-states-v-merck-medco/.


IvyPanda. "United States v Merck Medco." December 6, 2019. https://ivypanda.com/essays/united-states-v-merck-medco/.


IvyPanda. 2019. "United States v Merck Medco." December 6, 2019. https://ivypanda.com/essays/united-states-v-merck-medco/.


IvyPanda. (2019) 'United States v Merck Medco'. 6 December.

More related papers
Psst... Stuck with your
assignment? 😱
Psst... Stuck with your assignment? 😱
Do you need an essay to be done?
What type of assignment 📝 do you need?
How many pages (words) do you need? Let's see if we can help you!