AstraZeneca Pharmaceuticals LP pleaded guilty yesterday to conspiring to encourage doctors to bill for a prostate cancer drug that the company provided free, and agreed to pay $355 million to settle civil and criminal charges.

The London-based company admitted that it gave thousands of samples of the drug Zoladex to urologists knowing that the doctors would prescribe the injectable medication and then bill Medicare, Medicaid and other health insurance providers, according to the Justice Department and the Food and Drug Administration.

AstraZeneca cost Medicare and others almost $40 million, the Justice Department said. Most of the money, $291 million, will settle civil charges. The rest will be paid as a criminal fine.

"We accept responsibility for any improper sampling conduct that took place in the mid-1990s and have taken steps within our new company to prevent such activities from happening again," AstraZeneca said yesterday in a written statement. The samples were given out by Zeneca Inc., which merged with Astra-Merck to form AstraZeneca in 1999.

AstraZeneca's guilty plea is a result of one of the largest health fraud investigations the federal government has undertaken. In 2001, TAP Pharmaceutical Products Inc. of Lake Forest, Ill., paid $875 million to settle charges that it conspired with doctors to bill federal health programs for free samples of its prostate cancer drug, Lupron, in the mid-1990s.

The AstraZeneca and TAP settlements are the results of accusations made by whistle-blower Douglas N. Durand, the former vice president of sales for TAP. As an executive, Durand had access to letters between a division of TAP and Zeneca that documented how the companies defrauded Medicare, Durand said in an interview.

"It was egregious, the behaviors of both companies, in terms of fraud against consumers," said Durand, who filed a civil False Claims Act suit against the companies and will receive more than $125 million under the settlements.

Durand said each company knew of the other's illegal sales methods and kept a "peaceful coexistence."

"They would send these letters every year. You want to talk about a smoking gun, these letters were a smoking gun for both companies, especially for Zeneca," Durand said.

AstraZeneca also settled, without admitting liability, civil charges that it provided inducements to doctors for purchasing Zoladex and for improperly setting and reporting its price. Prosecutors had alleged that the company engaged in a practice known as "marketing the spread," in which a company sells its product to doctors at prices below the Medicare reimbursement and allow the doctor to keep the difference.

A statement prepared by the Justice Department said AstraZeneca also made illegal payments for "unrestricted educational grants, business assistance grants and services, travel and entertainment" to promote the sale of Zoladex.

"This is very significant," said Assistant U.S. Attorney Beth Moskow-Schnoll, who led the government's criminal prosecution of AstraZeneca. "Hopefully this should send a message that doctors should be prescribing drugs based on what the patient needs and not on what their bottom line is."

Although Medicare doesn't pay for most drugs, it does cover some, such as Zoladex and Lupron, that have to be injected by a doctor. According to IMS Health, Lupron had sales of about $580 million last year, and Zoladex about $233 million.

AstraZeneca pleaded guilty to violating the Prescription Drug Marketing Act by providing the free samples to doctors from 1993 to 1996. No company officials were charged.

Before the guilty plea was announced yesterday, three physicians were charged, and two pleaded guilty, to a conspiracy to bill for the Zoladex samples.

Mark B. McClellan, the U.S. commissioner of food and drugs, said yesterday that his agency is increasing its efforts to keep drug manufacturers honest and costs under control. The cost of prescription drugs is a central issue in the current congressional debate over expanding Medicare coverage to prescription drugs.

"Today's announcement sends a strong message that the FDA will enforce the laws and take vigorous actions against those who defraud consumers and abuse the health care system," he said.