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Wisconsin Joins U.S. And 15 Other States In Medicaid Suits Against Pharmaceutical Manufacturer

 

MADISON - Yesterday Wisconsin and fifteen other states filed a joint complaint in intervention against the drug manufacturer Wyeth alleging that the company knowingly failed to give the government the same discounts it provided to private purchasers of its drugs, as required by laws governing the Medicaid program.

 

"Particularly in difficult budget times like these, we will continue to aggressively enforce program requirements and hold providers accountable.  Its the only way to protect our taxpayer dollars while providing for our neediest citizens. This lawsuit is necessary to make sure we get the most from limited resources," said Van Hollen. 

 

Wyeth allegedly avoided paying hundreds of millions in rebates due to state Medicaid programs for its drugs, Protonix Oral and Protonix IV.  These drugs belong to a class of drugs known as proton pump inhibitors (PPI), which are used to suppress stomach acid.

 

This action by the states follows a similar intervention on May 18, 2009 by the United States in the same two whistleblower suits filed in the United States District Court for the District of Massachusetts against Wyeth.  Under the Medicaid Drug Rebate Program, drug manufacturers of brand name drugs (i.e., non-generic drugs) are required to report to the government the prices they charge their customers, including the "best price" offered for their drugs.  They also are required to pay rebates to the state Medicaid programs that are calculated based on any discounted prices that are offered to other customers.  Congress created the Medicaid Drug Rebate Program in order to ensure that Medicaid, one of the largest purchasers of drugs in the United States and the nations provider of health insurance to the poor and the disabled, received the benefit of the same discounts offered to large commercial customers in the marketplace.

 

Between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for Protonix Oral and Protonix IV under a pricing arrangement known as the "Protonix Performance Agreement."  This pricing arrangement required that the hospitals purchase both drugs together under a so-called "bundled" arrangement and it offered them a steep discount for doing so. Wyeth did this in part to gain access to the far more lucrative retail outpatient market, intending that patients who used the intravenous version of Protonix in the hospital would later purchase Protonix Oral once they were discharged from the hospital.  Under the Protonix Performance Agreement, hospitals that placed both products on their formularies and attained certain market share requirements were entitled to up to a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV.  Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective prices of the bundled drugs paid by hospitals under this arrangement, and to pass along the benefit of the lower prices to the state Medicaid programs, Wyeth allegedly failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in quarterly rebates.

 

The case is being handled by Assistant Attorney General Thomas Storm.  The investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorneys Office for the District of Massachusetts, and the Offices of Inspector General of the Department of Health and Human Services.  Wisconsin has assisted with the U.S. investigation of Wyeth over several years.