The federal government and 16 states have joined in two whistleblower suits against Wyeth, alleging that the drug manufacturer knowingly failed to give the government the same discounts it provided to private purchasers of its drugs, as required by the Medicaid program.
Wyeth allegedly avoided paying hundreds of millions in rebates due to state Medicaid programs for its drugs, Protonix Oral and Protonix IV.
Congress created the Medicaid Drug Rebate Program to ensure that Medicaid, one of the largest purchasers of drugs in the United States and the nation’s provider of health insurance to the poor and the disabled, receives the same discounts offered to large commercial customers in the marketplace.
Under that program, manufacturers of brand-name drugs are required to report to the government the prices they charge their customers, including the "best price" offered. They also are required to pay rebates to state Medicaid programs that are calculated on any discounted prices that are offered.
From 2000 to 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for Protonix Oral and Protonix IV under a pricing arrangement known as the "Protonix Performance Agreement." This allowed hospitals to purchase both drugs together as a "bundled" arrangement for a steep discount.
"Our complaint charges that Wyeth created the Protonix bundle so they could increase their market share at the expense of the Medicaid program – a program to provide the least advantaged Americans with necessary medical care and services," said Tony West, Assistant Attorney General for the Civil Division. "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."
Under the Protonix Performance Agreement, hospitals that placed both products on their formularies and attained certain market share requirements were entitled to up to a 94 percent discount off the list price of Protonix Oral and up to 80 percent off the list price of Protonix IV.
"The best price reporting requirement is designed to assure that the nation’s healthcare programs for the poor – the Medicaid programs – are treated equally with drug companies’ best commercial customers," said Michael K. Loucks, Acting U.S. Attorney for the District of Massachusetts. "We seek through today’s suit to put the Medicaid programs on par with Wyeth’s best customers, as it had agreed."
The two civil False Claims Act suits were filed against Wyeth and are pending in the District of Massachusetts. In addition to the United States, California, Delaware, the District of Columbia, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin also have intervened in the whistleblower suits against Wyeth.