Dow Jones Newswires
May 30, 2003

KENILWORTH, N.J. -- Schering-Plough Corp. (SGP) said it has been advised by the U.S. Attorney's Office for the District of Massachusetts that its Schering Corp. unit is the target of a criminal investigation, and it believes the government intends to pursue an indictment.

The company, which previously announced that the government was investigating its sales, marketing and clinical-trial practices, said Friday that a May 28 letter from the U.S. Attorney's Office states the investigation focuses on whether it:

• Provided drug samples or other incentives to managed-care organizations, physicians and others to persuade them to buy Schering pharmaceutical products for which payment was made through federal health-care programs;

• Sold misbranded or unapproved drugs;

• Submitted false pharmaceutical pricing information to the government for purposes of calculating rebates required to be paid to the Medicaid program; and

• Destroyed documents and obstructed justice related to the investigation.

The drug maker has been struggling with the expiration of the patent for Claritin, its one-time blockbuster allergy drug. Earlier this month, Schering reported a 71% drop in first-quarter profit on falling sales of key drugs.

Last month, Fred Hassan took over as chief executive and president, and said his priority in the short term would be to repair relations with drug regulators, in part by tending to manufacturing problems.

-By Judy Bocklage; Dow Jones Newswires; 609-520-7811

Updated May 30, 2003 11:21 a.m.