Drug maker Wyeth has been accused of cheating state and federal Medicaid programs out of millions of dollars by overcharging them for Protonix, the company’s widely-used acid reflux drug. The Justice Department and 15 states have joined in two whistleblower lawsuits filed in federal court in Massachusetts against the company. As you may recall, New York-based drug maker Pfizer Inc. is in the process of acquiring Wyeth for more than $60 billion in a deal expected to close later this year. Tony West, assistant attorney general for the Justice Department’s Civil Division, had this to say about the lawsuits:
By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have.
The federal government, which has aggressively pursued other drug makers in similar cases, is seeking penalties against the company of up to three times the amount lost by Medicaid. It’s alleged in the suit that between 2000 and 2006, Wyeth offered very large discounts to thousands of hospitals for two versions of Protonix, a drug that suppresses stomach acid. The government alleges that the maneuver helped the company avoid paying hundreds of millions of dollars in rebates to Medicaid, a health care program for the poor that is funded by state and federal money.
Wyeth bundled the intravenous version of Protonix with the oral version in sales packages to hospitals, so the company could make more money in the lucrative outpatient market. For the past six years, the federal government and a number of states have held the nation’s largest drug companies accountable for devising pricing schemes that cheated government health care programs out of billions of dollars.
The federal government has recovered more than $5 billion since 2003. Last year, Merck agreed to pay $650 million to settle allegations it overcharged Medicaid for the cholesterol medicine Zocor, the now withdrawn pain-reliever Vioxx, and other prescription drugs. The case against Merck, like the one against Wyeth, arose from lawsuits filed by whistleblowers under the False Claims Act and was then pursued by federal prosecutors. In 2007, Bristol-Myers agreed to pay $515 million to settle federal and state allegations into its marketing and pricing practices. In that case, Bristol-Myers allegedly denied federal health care programs the same lower prices for its anti-depression drug Serzone that it was charging a larger commercial customer.
As part of the same suit, Bristol-Myers and its former subsidiary, Apothecon, were accused of inflating prices on an assortment of oncology and generic drugs, knowing federal health care programs established reimbursement rates based on those prices. The states joining the current lawsuit against Wyeth are California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin. The District of Columbia also is part of the litigation.
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