In a major setback to pharmaceutical giant Wyeth, the US Justice Department and 16 states have joined two whisteblower lawsuits against the company, which contend that it has been involved in a massive fraud against the government.
According to the lawsuits, filed in a federal district court in Massachusetts, Wyeth avoided paying hundreds of millions of dollars in rebates due to state Medicaid programs, which provide health insurance to low-income families or people with disabilities, for its Protonix Oral and Protonix IV stomach acid drugs.
Medicaid, which is financed by the federal government and states, is qualified to obtain the lowest prices on prescription drugs. Drugmakers such as Wyeth in turn are required to pay rebates to states based on any other discounts they have offered.
But the Justice Department claimed Monday that between 2000 and 2006, "Wyeth offered steep discounts to thousands of hospitals nationwide" through the "Protonix Performance Agreement."
That pricing arrangement provided up to 94 percent discounts off the Protonix Oral list price and 80 percent off that of Protonix IV.
"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," Assistant Attorney General Tony West said in a statement.
"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."
In addition to the capital Washington (District of Columbia), the states that joined the lawsuit were: California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin.