DOJ Catch of the Week -- Wyeth/Pfizer
By the C|C Whistleblower Lawyer Team
This week’s Department of Justice “Catch of the Week” goes to the pharmaceutical giants Wyeth and Pfizer, Inc. On Wednesday, the companies agreed to pay $784.6 million to resolve allegations that Wyeth violated the False Claims Act by reporting to the government false prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral and Protonix IV. These drugs are used to treat acid reflux symptoms, among other things. New York City-based Pfizer acquired New Jersey-based Wyeth in 2009, roughly three years after Wyeth had ended the alleged misconduct. See DOJ Press Release.
Under the state Medicaid programs, drug companies must report to the government the best prices they offer other customers for their brand name drugs. They then must provide rebates to the state programs tied to these reported prices so Medicaid receives the same discounts drug companies offer to other large customers. According to the government, Wyeth hid from Medicaid bundled discounts it provided to thousands of hospitals across the country on Protonix Oral and Protonix IV.
Wyeth allegedly used these bundled discounts to induce hospitals to buy and use Protonix Oral, which they otherwise would have had little incentive to use because of the availability of alternative competitively priced pre-existing oral PPI drugs. The government claimed that 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 and pay nearly full price for the drug.
By failing to report these bundled discount, Wyeth allegedly avoided paying hundreds of millions of dollars in rebates. Under the terms of the settlement, Wyeth will pay roughly $413 million to the federal government and $371 million to state Medicaid programs. As part of the settlement, Wyeth and Pfizer do not deny the government’s allegations.
In announcing the settlement, the government stressed its “unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal health care programs – programs that protect the poor and disabled.” The allegations were first raised in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Lauren Kieff, a former hospital sales representative for AstraZeneca and William St. John LaCorte, a physician practicing in New Orleans. They will collectively receive a whistleblower award of roughly $98 million from the proceeds of the federal and state settlements.