DOJ announces $784.6-million deal with Pfizer to settle alleged Protonix underpayments to Medicaid

The US Department of Justice (DOJ) on Wednesday confirmed Pfizer's previously disclosed settlement of $784.6 million to resolve allegations that its Wyeth unit intentionally reported false and fraudulentprices for the proton pump inhibitor (PPI) Protonix (pantoprazole). US attorney for the district of Massachusetts Carmen Ortiz remarked that "this significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid programme or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs."

According to a complaint filed in 2009, Wyeth allegedly sold the oral and intravenous versions of Protonix to thousands of hospitals nationwide at "deep discounts" via a bundled sales arrangement. "Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug," the DOJ stated. The lawsuit claimed Wyeth hid the bundled discounts from Medicaid and avoided paying hundreds of millions of dollars in rebates to the healthcare programme between 2001 and 2006 as a result.

Under the terms of the settlement, Pfizer will pay more than $413 million to the federal government, while over $371 million will be allotted to state Medicaid programmes. The DOJ noted that as part of the agreement, neither Pfizer, nor its Wyeth unit, which it acquired in 2009 for $68 billion, deny the government's allegations.

Pfizer general counsel Doug Lankler said the company is "pleased to have finalised the agreement to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before we acquired Wyeth." He added "the resolution of these claims reflects our desire to put these historic cases behind us and to focus on the needs of patients."

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