Medicaid rebate allegations near resolution

ATLANTA — Attorney General Sam Olens announced Monday that the state of Georgia has reached an agreement in principle to settle allegations against Wyeth, a wholly owned subsidiary of Pfizer Inc., that would resolve allegations that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales of Protonix Oral and Protonix IV between 2001 and 2006.

Under the settlement, Olens’ office said, Wyeth has agreed to pay $784.6 million to the U.S. and the states. Georgia would receive more than $3.2 million under the settlement.

“This settlement demonstrates our continued commitment to protecting taxpayer dollars and holding drug companies accountable for causing Medicaid to pay more than it should for pharmaceutical drugs,” Olens said.

The settlement stems from two whistleblower lawsuits that were filed in the U.S. District Court for the District of Massachusetts.

The Medicaid Drug Rebate Program, Olens’ office said, 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 was determined from each pharmaceutical manufacturer’s reported “best price,” or the lowest price for which it sold a covered drug in a particular quarter.

The settlement resolves allegations that Wyeth failed to report discounts it gave to certain hospitals, thereby allegedly falsely reporting its best prices for Protonix Oral and Protonix IV and underpaying rebates owed to the Medicaid Drug Rebate Program.

The state settlements were negotiated by a team of states led by representatives from the offices of the attorneys general for New York, North Carolina, Indiana and Massachusetts, who were working with the Department of Justice, the U.S. Attorney’s Office for the District of Massachusetts, and the U.S. Department of Health and Human Services Office of Inspector General.

Pfizer, headquartered in New York City, acquired Wyeth, which was headquartered in Madison, N.J., in 2009, which was after the period in which the allegations were said by authorities to have occurred.