Pharma Giant Wyeth Accused of Medicaid Fraud in 16 States

On May 18, 2009, the United States Department of Justice announced that the United States and 16 states have joined in two whistleblower lawsuits against Wyeth, a giant pharmaceutical company. Wyeth allegedly failed to provide the same discounts to the government for its drugs, Protonix Oral and Protonix IV, as it provided for private purchasers. By failing to give the government equal discounts, Wyeth fraudulently avoided paying hundreds of millions of dollars in rebates, and in so doing violated the Medicaid Drug Rebate Program.

The Medicaid Drug Rebate Program was designed to guarantee that Medicaid, the nation’s provider of health insurance to the poor and disabled, would receive the same discounts enjoyed by large commercial customers in the market. From 2000 to 2006, Wyeth supplied Protonix Oral and Protonix IV in “bundled” packages to hospitals, who then received 94% and 80% discounts, respectively, for purchasing the drugs together. In Wyeth’s case, the company was required to determine the effective prices hospitals paid in this agreement, and offer the same prices to Medicaid. The company allegedly to have failed to do this.

“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.”

The two separate civil False Claims Act suits – called qui tam actions – 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.

“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.”

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