In February 2016, Pfizer subsidiary Wyeth agreed in principle to pay $784.6 million to the U.S. government, 37 states and the District of Columbia to resolve False Claims Act charges filed by whistleblower Lauren Kieff that Wyeth overcharged Medicaid programs by underpaying drug rebates for the acid suppression drugs Protonix Oral tablet and Protonix I.V. The agreement was finalized and the funds were distributed on May 20, 2016. The settlement was the seventh largest False Claims Act civil recovery in history.
Kieff’s False Claims Act lawsuit was filed in 2003 in the U.S. District Court, District of Massachusetts, alleging that during the period 2001 through 2006, Wyeth underpaid by millions of dollars its Medicaid rebates to the federal Centers for Medicare & Medicaid Services (CMS) on its acid suppression drugs Protonix Oral tablet and Protonix I.V., a related drug taken intravenously. Such rebates are intended to provide Medicaid, the health insurance program for the poor, with the benefit of the lowest price paid for a prescription drug by a private purchaser.
The settlement also resolves similar allegations brought under the federal False Claims Act and its state law equivalents by William St. James LaCorte, M.D., that were consolidated with those of Kieff in 2006.
The federal government, the states, and the District of Columbia intervened in the case in 2009, thereby assuming responsibility for its prosecution. At the time settlement in principle was achieved, a trial date was scheduled for March 7, 2016, less than a month away.
Kieff, who learned of the alleged fraud while working at another pharmaceutical company, educating hospital pharmacists, physicians and healthcare providers about acid suppression drugs, praised the Department of Justice for its perseverance in the case, saying she was satisfied that the government’s and taxpayers’ interests had been appropriately recognized and protected.
The federal False Claims Act and its state law equivalents permit private citizens to bring lawsuits on behalf of the federal and state governments against persons who present false or fraudulent claims for payment under government contracts or programs, including the Medicaid program. Whistleblowers, such as Ms. Kieff and Dr. LaCorte, are entitled to receive a portion of the proceeds of any settlement or judgment awarded against a defendant.
In addition to the U.S. government and the District of Columbia, the 37 states involved in the case were Massachusetts, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.
Jeanne Markey and Gary Azorsky of Cohen Milstein served as co-lead counsel representing Lauren Kieff. Kieff also was represented by Casey Preston of Cohen Milstein, Jonathan Shapiro of Shapiro Weissberg & Garin LLP, and formerly, David M. Rapaport, now deceased. Dr. LaCorte was represented by Sherif Sakla, M.D., and Stephanie Ruether of The Sakla Law Firm.
The U.S. government attorneys prosecuting the case were led by Andy Mao and Sanjay Bhambhani of the U.S. Department of Justice in Washington, D.C., and by Gregg Shapiro and Brian Pérez-Daple of the U.S. Attorney’s Office in Boston. Carolyn Ellis of the New York State Attorney General’s Office and Steven Sharobem of the Attorney General’s Office for the Commonwealth of Massachusetts led the states’ efforts in this case.