ALBANY, N.Y. (NEWS10) – Pharmaceutical company Wyeth and its parent company Pfizer, Inc. have finalized an agreement to pay $784.6 million to resolve claims that Wyeth knowingly reported false prices and underpaid drug rebates owed to Medicaid.
Attorney General Eric Schneiderman announced on Wednesday, that New York, along with 34 other states and the Federal Government, finalized an agreement with Wyeth, in which the company will pay New York’s Medicaid program $55.6 million. The settlement was previously disclosed in February 2016, and Pfizer recorded the charge in the fourth quarter of 2015.
The settlement stems from two whistleblower lawsuits alleging that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales of Protonix Oral and Protonix IV between 2001 and 2006.
The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 as a cost lowering measure for Medicaid payments for outpatient drugs. The program requires participating pharmaceutical manufacturers to pay rebates to State Medicaid programs for each of its drugs sold to pharmacies that were reimbursed by Medicaid. The amount of the rebates is determined by each pharmaceutical manufacturer’s reported “Best Price,” or the lowest price for which it sold a covered drug.
The lawsuits allege that Wyeth sold Protonix Oral tablets and Protonix IV as discounted bundles to hospitals, but then falsely reported the drug sales at their higher, unbundled prices. As a result, Wyeth was on the hook for lower Medicaid drug rebate payments to the State.
Because the Medicaid program is jointly funded by the federal and state governments, Pfizer, which acquired Wyeth in 2009 after alleged misconduct, will pay in excess of $413 million of the $784.6 million to the United States. The States will receive $371 million of the settlement.
Attorney General Schneiderman said in a statement, “This settlement sends the message that efforts to shortchange Medicaid will not be tolerated, and that my office will continue working to ensure that pharmaceutical companies report accurate prices and pay what they owe to the Medicaid Program.”
Pfizer released the following statement:
“We are pleased to have finalized the agreement to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before we acquired Wyeth,” said Doug Lankler, Pfizer Executive Vice President and General Counsel. “The resolution of these claims reflects our desire to put these historic cases behind us and to focus on the needs of patients.”