July 01, 2016

Pfizer Inc.'s subsidiary Wyeth agreed in late April to shell out $784.6 million to resolve state and federal claims that the unit, which Pfizer acquired in 2009, underpaid drug rebates to Medicaid in sales of two popular heartburn drugs.

The resolution, in which Pfizer and Wyeth do not deny the allegations, stems from two whistleblower lawsuits filed in U.S. district court in Boston.

Prosecutors alleged that from 2001 to 2006, Wyeth hid from state and federal officials the true price of the drugs, Protonix Oral and Protonix IV, which it was offering thousands of hospitals at a deep discount based on their bundled purchases. The Medicaid rebate program requires participating pharmaceutical manufacturers to pay quarterly rebates to state Medicaid programs for each of its drugs sold to pharmacies that were reimbursed by Medicaid. The quarterly rebate for each drug was determined from the reported lowest price for which its maker sold it in that quarter.

Wyeth's alleged misrepresentations came to light when a former sales rep for another drug company, Lauren Kieff, and a New Orleans physician, William LaCorte, who often prescribed the drug, filed a sealed False Claims Act suits in 2003 and 2006, respectively. The U.S. Department of Justice intervened in the case in 2009.