US drugmaker Schering-Plough has agreed to pay $345.5m (£190m) in fines and damages after pleading guilty to defrauding Medicaid.
Schering-Plough has signed a five year corporate integrity agreement
It admitted paying kickbacks to ensure an allergy drug remained on lists of approved treatment.
The payments, to two health insurance providers, meant the drug was available cheaper privately than on the state funded program, illegal under US law.
The company will pay a criminal fine of $52.5m (£28.8m) and damages of $293m.
The US Justice Department has been investigating transactions between the New Jersey based company and the health maintenance organisations since 1999.
Schering-Plough admitted to paying cash and other financial incentives to HMOS operated by Cigna Corp and PacificCare related to the drug Claritin.
The incentives meant that the price paid by the HMOs was lower than the price charged to them.
Federal prosecutors argued that the company had violated federal law by failing to provide the lowest price for the drug to Medicaid, the government backed health insurance program for the poor.
Brent Saunders, senior vice president of global compliance and business practice, said the settlement was an "important step" in the transformation of the company, whose revenues were affected by Claritin's loss of patent protection in 2002.
"We are making progress with our corporate strategy to build a new company where quality, compliance and business integrity are at the centre of our work," he said.
"We are now pleased that we are putting this matter from the past behind us."
Under the terms of the settlement with the US Attorney's Office in Philadelphia, Schering-Plough will be required to pay the fines and damages by March 2005.