The Justice Department today joined whistleblower lawsuits against pharmaceutical giant Wyeth, alleging that the company bilked state Medicaid programs of hundreds of millions of dollars. Fifteen states and the District of Columbia have also joined the two lawsuits, filed in U.S. District Court for the District of Massachusetts. Click here for the news release.
Under the Medicaid program, participating companies are required to give the government the same discount on drug prices they provide to private purchasers. The lawsuits allege that between 2000 and 2006 Wyeth entered into special pricing arrangements with thousands of hospitals nationwide for its products, Protonix Oral and Protonix IV, which treat acid-related stomach and throat problems. If the hospitals purchased both, Wyeth offered a steep discount, in some cases up to 94 percent off the price of the oral form of the drug and 80 percent off the price of the intravenous form. Wyeth concealed the arrangements from the government and thereby avoided paying hundreds of millions of dollars to Medicaid in rebates, the lawsuits allege.
Tony West, the new head of the Justice Department’s Civil Division, said Wyeth’s bundling of the drugs to increase their market share came at the expense of Medicaid.
“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,” West said in a statement.
Douglas Petkus, a spokesman for Wyeth, said the company would fight the lawsuits. "The company believes that its pricing calculation were correct and intends to defend itself vigorously in these actions," he said.
California, Delaware, the District of Columbia, Florida, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Nevada, New Hampshire, New York, Tennessee, Texas, Virginia, and Wisconsin have also intervened in the suits.
The announcement comes little more than two months after the pharmaceutical company lost a closely watched federal pre-emption case before the U.S. Supreme Court. In Wyeth v. Levine, the Court ruled the federal drug labeling law did not pre-empt the state court claim of Vermont musician Diana Levine, who sued when she lost her forearm in 2000 to gangrene because of improper administration of the drug Phenergan. The decision allowed Levine to collect on a roughly $7 million (plus interest) jury award she won in 2004.