The U.S. government and 16 states have joined in two whistleblower suits against pharmaceutical giant Wyeth. The drug company allegedly failed to pay hundreds of millions in rebates to the Medicaid program, according to a May 18, 2009 release by the U.S. Department of Justice.

The suit alleges that Wyeth knowingly failed to give the government the same discounts it provided to private purchasers, as required by Medicaid law. According to the release, between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for the drugs Protonix Oral and Protonix IV, two proton pump inhibitors used to suppress stomach acid. 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 discharged. Under the bundled arrangement, 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 paid by hospitals under this arrangement and to pass along the benefit of the lowest prices to the state Medicaid programs, Wyeth allegedly failed to do so.

For more on this case, go to US DOJ website

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