he drug giant Schering-Plough has agreed to pay $350 million in fines and plead guilty to criminal charges that it cheated the federal Medicaid program, according to people involved in the case.

The settlement, expected to be announced next week with federal prosecutors in Philadelphia, stems from a six-year investigation prompted by three whistle-blowers who accused Schering-Plough of selling its products to private health care providers for far less than it sold them to Medicaid.

Federal law requires drug makers to offer their lowest prices to Medicaid, the federal and state health program for the poor.

In the settlement, which is still subject to final approval from a judge, Schering-Plough is expected to admit that it gave grants to the private providers to conduct patient education and marketing programs as part of a kickback scheme to induce them to buy Schering-Plough's drugs at relatively high prices, according to a person involved in the investigation and another informed of the negotiations. Schering-Plough then billed Medicaid officials at these high prices - without giving the offsetting grants.

Last year, Bayer paid $257 million and GlaxoSmithKline paid $86.7 million to settle similar allegations.

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http://www.nytimes.com/2004/07/16/business/16settle.html?th