The Justice Department and sixteen states are accusing drug giant, Wyeth Pharmaceuticals, of cheating Medicaid programs out of hundreds of millions of dollars in rebates by overcharging for two versions of its acid-reflux drug, Protonix.
Two whistle blower lawsuits against Wyeth have been filed in Massachusetts District Court.
The complaint alleges, from 2000 to 2006, Wyeth offered deep discounts to thousands of hospitals nationwide for two versions of the drug -- Protonix Oral and Protonix IV -- used to suppress stomach acid. But the company deliberately avoided paying state Medicaid programs hundreds of millions of dollars in rebates for these drugs. Before cheaper generics were available, Wyeth was making nearly $2 billion a year in profits on these drugs.
"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," said Tony West, assistant U.S. attorney general for the Civil Division, in a news release.
The company defends its pricing plan.
“Wyeth believes that its pricing was correct and intends to vigorously defend against these actions,” said Doug Petkus, a Wyeth spokesman.
Under the Medicaid Drug Rebate Program, makers of brand name drugs are required to report to the government the prices they charge their customers, including “best price” offerings of their drugs.
They are also required to pay rebates to state Medicaid programs that are calculated based on any discounted prices offered. The Medicaid Drug Rebate Program was created to ensure that Medicaid, one of the largest purchasers of drugs in the U.S. and the nation’s health-insurance program for the poor and disabled, received benefit of the same discounts offered to large commercial customers.
Wyeth is no Stranger to Bad Press
Diana Levine recently won a failure-to-warn lawsuit against Wyeth in Vermont state court, saying the drug label failed to contain explicit information that would have sufficiently warned a physician assistant from injecting Levine’s arm with the anti-nausea drug, Phenergan, through the IV push method directly into her bloodstream in 2000.
Levine, a musician, lost the lower half of her right arm to gangrene. She was awarded $6.7 million in damages.
And, in April, a Texas appeals court ruled Wyeth must face a personal injury lawsuit filed by a woman who claims Prempro, a hormone-replacement drug, caused her breast cancer. #