The U.S. and 16 states have filed two False Claims Act suits against Wyeth, alleging that the drug maker intentionally overcharged the government for Protonix Oral and Protonix IV administered under state Medicaid programs that provide health insurance to the poor. The two whistleblower lawsuits claim that Wyeth must pay rebates to state Medicaid programs that total hundreds of millions of dollars.

Under the Medicaid Drug Rebate Program, name-brand drug manufacturers must report the “best price” given to private customers. Manufacturers then must pay rebates based on the best price to state Medicaid programs. The practice is intended to guarantee that Medicaid receives the same discounts given to large commercial customers.

But Wyeth allegedly employed a “don’t know, don’t tell” policy in which it failed to report its lowest prices by declining to determine its actual prices under deals cut with private hospitals. From 2000 to 2006, Wyeth had an agreement with hospitals to offer large discounts for purchasing Protonix Oral and Protonix IV together. Facilities that placed both medications on their drug lists and met required market-share goals received discounts as high as 80 and 90% off the list price. The government charges that Wyeth failed to determine the effective “best price” that hospitals paid under this agreement and that Wyeth did not offer these low prices to state Medicaid programs. The drug maker thereby avoided paying enormous quarterly rebates to state Medicaid programs, the suits claim.

For the full story, go to Pharmtech.com.