Pfizer, Wyeth will pay $784.6 million to settle allegations they underpaid drug rebates to Medicaid
Wyeth failed to give government same discounts it provided to private buyers, as required by Medicaid, authorities said.
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Drug companies Wyeth and Pfizer have agreed to pay $784.6 million to settle allegations that Wyeth did not provide the same drug discounts to Medicaid that it gave to private buyers, the U.S. Attorney's office announced Wednesday.
As part of the settlement, Wyeth and Pfizer do not deny the government's allegations. Pfizer, which is headquartered in New York City, bought Wyeth in 2009. The actions in question occurred before the acquisition.
The U.S. Attorney's Office said Wyeth gave thousands of hospitals significant discounts on two proton pump inhibitor drugs, Protonix Oral and Protonix IV, but didn't report those discounts to Medicaid. Authorities say the discounts were a means to compel hospitals to use Protonix Oral instead of other similar drugs that were priced competitively and said to be safe and equally effective.
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"Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, during which payers, including Medicaid, would pay nearly full price for the drug," the U.S. Attorney's Office said in a statement.
Medicaid rules require drug companies to report to the government the best prices they offer other customers. Drug companies pay rebates to state Medicaid programs based on those prices, therefore ensuring that Medicaid gets the same discounts as other big customers.
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According to the government's allegations, Wyeth hid the bundled discounts they gave from Medicaid, therefore wrongfully avoiding paying hundreds of millions in rebates to Medicaid from 2001 to 2006, the U.S. Attorney's Office said.
The settlement stipulates Wyeth pay $413.2 million to the federal government and $371.3 million to state Medicaid programs. Two whistleblowers filed the allegations, Lauren Kieff and William St. John LaCorte. Under the False Claims Act, private parties who sue on behalf of the government receive a portion of the recovery. In this case, federal and state governments will pay the whistleblowers a combined share of $98 million.
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The case was investigated by the Department of Health and Human Services, Office of the Inspector General and the FBI.
Twitter: @BethJSanborn
