Pfizer Settles Suit Regarding Underpaying Rebates Under Medicaid Drug Rebate Program

Related articles

A suit regarding allegations that Wyeth, now a wholly owned subsidiary of Pfizer, Inc.,   knowingly underpaid rebates owed under the Medicaid Prescription Drug Rebate Program for the sales of Protonix Oral and Protonix IV between 2001 and 2006, has been settled. Pfizer acquired Wyeth, Inc., in 2009, after the conduct alleged in the lawsuits.

The Medicaid Prescription Drug Rebate Program was enacted in 1990 as a cost containment measure Medicaid for outpatient drugs .  The program requires participating pharmaceutical companies to rebate Medicaid programs for drugs sold to pharmacies that were reimbursed by Medicaid.  The quarterly rebate is determined from each pharmaceutical manufacturer’s reported “Best Price,” or the lowest price for which it sold a covered drug in a particular quarter.  

U.S., al., ex rel. Kieff v. Wyeth Pharmaceuticals, Inc., Civ. No. 03-cv-12366, and  U.S., , et al., ex rel. William St. John LaCorte v. Wyeth, Civ. No. 06-cv-11724  were filed in the United States District Court for the District of Massachusetts.  In their court filings, the plaintiffs alleged that during the third quarter 2001 through 2006, Wyeth sold Protonix Oral tablets and Protonix IV to hospitals at discounted prices, creating a bundled sale by linking discounts available to participating hospitals for Protonix IV to discounts on Protonix Oral tablets.   However, Wyeth did not treat the sales of Protonix Oral tablets and Protonix IV as bundled within the rules of the Medicaid Drug Rebate Program and so failed to properly allocate the discounts available under the contract.   Given that, Wyeth was considered to have falsely reported its Best Prices for Protonix Oral tablets and Protonix IV thereby causing the Unit Rebate Amount for Protonix Oral tablets and Protonix IV, used to determine the quarterly rebate to pay the State for each drug, to be understated. 

The United States, 35 states and the District of Columbia intervened in the lawsuits.

Wyeth has agreed to pay $784.6 million to the United States and the States.