US drug maker Pfizer has agreed to pay $785 million to settle allegations that one of its units has offered discounts to private purchasers on heartburn drugs and neglecting the same for Medicaid patients.
Wyeth, the unit, was accused of knowingly reporting to the government false and fraudulent prices for two forms of Protonix, a drug notably used to treat symptoms of acid reflux, from 2001 at 2006, before it was acquired by Pfizer in 2009, the Justice Department said.
Wyeth failed to report deep discounts on the two drugs it made available to thousands of hospitals nationwide, and as a result wrongfully avoided paying "hundreds of millions of dollars" in rebates to Medicaid, the government health insurance provider for the poor and people with disabilities, the department said .
Under the Medicaid program, drug companies must report to the government the best prices they offer other customers for their brand-name drugs.
Based on those prices, the drug companies pay rebates to the state Medicaid programs so that Medicaid receives the same discounts drug companies offer to other large customers.
Under the terms of the settlement, Wyeth will pay $413.2 million to the federal government and $371.4 million to state Medicaid programs.