Justice Dept. alleges Wyeth cheated Medicaid out of 'hundreds of millions'

WASHINGTON Drug maker Wyeth has become the subject of lawsuits accusing it of cheating Medicaid programs out of hundreds of millions of dollars.

The U.S. Department of Justice, 15 states and the District of Columbia have joined two whistleblower suits filed in Massachusetts against the company, alleging that it violated a Medicaid law requiring branded drug manufacturers to give the government the same discounts for their drugs that they give to private purchasers.

The plaintiffs allege that Wyeth failed to pay hundreds of millions of dollars in rebates to state Medicaid programs for the oral and intravenous formulations of the acid-reflux disease drug Protonix (pantoprazole).

“The company believes that its pricing calculations were correct and intends to defend itself vigorously in these actions,” Wyeth spokesman Doug Petkus told Drug Store News.

Petkus also said the company had not yet been officially served the complaint, though this was expected to change soon.

Wyeth offered thousands of hospitals large discounts on Protonix between 2000 and 2006 under its Protonix Performance Agreement pricing arrangement, requiring hospitals to purchase the oral and IV formulations of the drug bundled together in exchange for discounts of up to 94% and 80%, respectively, with the idea that patients who received Protonix intravenously in the hospitals would later purchase the pills after being discharged. But Wyeth allegedly failed to pass the benefit of the lowest prices to state Medicaid programs, as required, the Justice Department said.

“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,” Justice Department Civil Division 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.”

California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin have joined the suit.

The suit comes days after Wyeth and a partner company lost an appeal in the U.S. District Court of Appeals for the Federal Circuit against generic drug makers Teva Pharmaceutical Industries and Sun Pharmaceutical Industries to halt the marketing of generic versions of Protonix. In March, the Supreme Court upheld a $6.7 million award for a Vermont musician whose arm had to be amputated after she received a botched injection of Wyeth’s anti-nausea drug Phenergan (promethazine). In November, the First District Court of Appeals of California ruled that Wyeth could be held liable for injuries resulting from generic versions of its drugs in the case of Conte v. Wyeth.