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Pfizer to pay $784.6 million fine due to Wyeth Medicaid fraud

Published on 28/04/16 at 08:40am

Pfizer has agreed to pay $784.6 million in a settlement with the US Department of Justice, relating to false and fraudulent prices charged by Wyeth, a company Pfizer purchased in 2009.

The claim that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitors (PPI) drugs, Protonix Oral and Protonix IV, was not denied by Wyeth and Pfizer.

In detail, it was claimed that Wyeth hid from national health insurer, Medicaid, the bundled discounts the company gave to hospitals on the two drugs. The bundled arrangement also sought to induce hospitals to buy and use Protonix Oral, which hospitals would have had little incentive to use, because of the competitive price of comparative drugs. As a result, Wyeth wrongfully avoided paying hundreds of millions of dollars in rebates to Medicaid during the period 2001 to 2006.

Under the terms of the settlement, Wyeth and Pfizer will pay $413.2 million to the federal government and $371.3 million to state Medicaid programs.

US Attorney Carmen Ortiz says: “This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs. This settlement, after years of hard-fought litigation, shows our commitment to ensuring that healthcare businesses do not take advantage of the federal health insurance programs which serve those who need assistance most.”

The allegations came to light following a complaint under the False Claims Act, taken by former AstraZeneca sales rep, Lauren Kieff, and New Orelans practising physician, William St. John LaCorte. Under this act, private individuals may sure on the behalf of the government for false claims of state funds and receive a share in any settlement. In this case, the pair will receive $98 million.

Since 2009, the US government has recovered $29 billion through False Claims Act cased, with $17 billion of that recovered in cases involving alleged fraud against federal health care programs.

Sean Murray

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