Merck has settled a nationwide claim totaling $649 million, plus $22 million in interest, to 49 states, the District of Columbia and the federal government, for failing to pay rebates to state Medicaid programs and overcharging government health programs for its drugs.

The drug companies that supply products to Medicaid recipients are required to give Medicaid programs the benefit of the best price available for the products. The information is then used to calculate rebates to be paid by these manufacturers to the state Medicaid programs.

According to the states, Merck did not report the correct best price for Zocor, Vioxx and Pepcid, and the settlement is expected to bring to an end the allegations that the company failed to pay the rebates.