- The Justice Department has ordered Pfizer to pay $784.6 million, which includes $413 million to the federal government and $371 million to state Medicaid programs.
- According to DOJ allegations, drugmaker Wyeth, which Pfizer purchased in 2009, failed to report institutional sales agreements involving Protonix Oral and IV formulations, resulting in lower Medicaid rebates.
- DOJ claimed Wyeth did not report the discounted prices to the federal government, thereby avoiding paying hundreds of millions of dollars in rebates between 2001 and 2006.
The source of the allegations in this case were two whistleblowers, including a hospital sales rep from AstraZeneca and a practicing physician in Louisiana. They filed their allegations under the False Claims Act, which allows individuals to sue on behalf of the government and receive a portion of the claims.
The issue here is not uncommon. Federal regulations stipulate that drugmakers must rebate Medicaid any difference between the price paid by the program and the cheapest price paid by any customer. Failure to adhere to these guidelines opens drugmakers to potential fraud prosecution.
Wyeth will pay more than $413 million to the federal government and more than $371 million to state Medicaid programs under the agreement. The Justice Department noted the behavior ended more than three years before Pfizer acquired Wyeth.
In response to the settlement, U.S. Attorney Carmen Ortiz for the District of Massachusetts, said, “This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs.”