UPDATE: US DOJ, 16 States Join Suits Against Wyeth On Protonix Pricing
May 18 2009 - 6:16PM
Dow Jones News
The U.S. Department of Justice and 16 states joined two
whistleblower lawsuits Monday alleging that Wyeth (WYE) overcharged
state Medicaid programs hundreds of millions of dollars for the
acid reflux drug Protonix.
The lawsuits, filed in federal court in Massachusetts, allege
that the New Jersey-based drug maker knowingly failed to give the
government the same discounts it provided to private purchasers of
its drugs.
The government is seeking to recover monetary damages that are
three times the amount of the alleged fraud, as well as civil
penalties.
The federal government and the states allege that Wyeth gave
deep discounts on oral and intravenous versions of Protonix to
hospitals that bought both drugs together in a bundling
arrangement, but didn't pass along those lower prices to state
Medicaid programs.
"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," Assistant Attorney General Tony West
said in a statement.
Wyeth spokesman Douglas Petkus said, "The company believes that
its pricing calculations were correct and intends to defend itself
vigorously in these actions."
The company had previously disclosed the Protonix pricing
investigation in SEC filings, but all details of the lawsuits had
been under seal. The lawsuits were made public Monday when the
government intervened in the case.
Under federal law, drug makers are required to report to the
government the best prices for their drugs and give those reduced
rates to the Medicaid program in the form of rebates.
Government lawyers allege that the prices Wyeth quoted in its
government reports on Protonix did not reflect the discounts given
to hospitals. The government says hospitals who bought Protonix
through the bundling program were entitled to up to a 94% discount
off the list price of the oral version of the drug, and up to 80%
off the list price of the intravenous version.
The discounting at issue allegedly took place between 2000 and
2006.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com