Pfizer Inc. has agreed to pay $784.6 million to resolve a 14-year-old lawsuit claiming its Wyeth unit overcharged the government by hiding the discounts it was giving hospitals for drugs used to treat acid-related damage to the esophagus. The hidden discounts meant that Medicaid paid “hundred of millions of dollars” more for the drugs than it should have from 2001 to 2006, according to a statement from U.S. Attorney Carmen Ortiz in Boston.
Pfizer, which acquired Wyeth in 2009, announced the broad terms of the agreement in February. The settlement covers bundled discounts given for Protonix Oral and Protonix IV. Benjamin C. Mizer, Deputy Assistant Attorney General at the Department of Justice, said in a statement:
This settlement demonstrates our unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal health care programs.
Several other drugmakers have resolved cases accusing them of failing to give Medicaid required drug discounts related to the best prices offered to private purchasers. Under the Pfizer settlement, $413.2 million will go the U.S. and $371.4 million to state governments.
The settlement resolves two lawsuits filed under the False Claims Act. Two whistleblowers, Lauren Kieff and William St. John LaCorte, will share $98.1 million, according to the Justice Department. Dr. LaCorte, a physician in New Orleans who filed suit in 2002, will get $64 million plus interest, according to the settlement agreement. Ms. Kieff, a former hospital sales representative in Massachusetts for AstraZeneca Plc, filed suit sued a year later. Dr. LaCorte claimed that Wyeth sold Protonix Oral tablets to hospitals for as low as 16 cents per tablet while not reporting that price to federal programs.
Ms. Kieff, who was marketing competing drugs for AstraZeneca, believed that Wyeth had an unfair advantage. It appears from reports that “hospitals were buying the drug and getting incredible discounts, and the government was not getting the benefit of those prices.” Proving the case was said to be a “very difficult, complicated” process, partly because the regulations for best drug prices were rewritten in 2007. It appears that the Justice Department, which intervened and filed its own complaint in 2009, did good work in this matter. James Markey, who represented the Plaintiffs, had this to say:
The government used brick by brick its analytical skills, its data-mining skills and its ability to elicit testimony and build a case showing there was knowledge of the fraud at Wyeth, or alternatively, willful blindness.
The cases are U.S. ex rel. LaCorte v. Wyeth, U.S. District Court, Eastern District of Louisiana and U.S. ex rel. Kieff v. Wyeth, U.S. District Court, District of Massachusetts (Boston).
Source: Bloomberg News
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