On February 24, 2010, Judge Douglas P. Woodlock of the U.S. District Court in Boston denied the motion to dismiss filed by Wyeth (now known as Pfizer). The case against Wyeth will now proceed to discovery. Plaintiffs allege that Wyeth knowingly failed to pay rebates to Medicaid on sales of its acid suppression drugs Protonix Oral and Protonix I.V.

Previously the United States and 16 States joined in a whistleblower lawsuit against pharmaceutical company Wyeth, Inc. which was filed by Berger & Montague, P.C. in the District of Massachusetts on behalf of its client, a pharmaceutical industry insider. On May 7, 2010, 17 additional states filed a motion with the Court to join the lawsuit.

The whistleblower’s lawsuit, which was originally filed under seal in 2003, was brought pursuant to the federal False Claims Act which allows a private citizen with knowledge of fraud to bring a case on behalf of the government against a company cheating the government.  The law encourages private individuals to help the government fight fraud and recover taxpayer money. 
 
The case alleges that Wyeth knowingly failed to pay hundreds of millions of dollars in rebates to Medicaid (which provides prescription drug coverage to the nation’s poor and disabled) on sales of its drugs Protonix Oral and Protonix IV.  Under the Medicaid Drug Rebate Program, drug companies must give the government the benefit of the lowest, or “Best Price”, offered for their drugs.  This is accomplished through the payment of periodic rebates by the drug company to Medicaid, calculated on the basis of discounts offered to purchasers such as wholesalers, retailers and health maintenance organizations.  One category of purchaser which is included for purposes of determining Best Price is hospitals. Between 2001 and 2006, Wyeth offered steep discounts on Protonix Oral and Protonix IV to thousands of hospitals nationwide, but did not pass along these discounts to Medicaid.  As a result, Wyeth underpaid Medicaid by hundreds of millions of dollars.

The states prosecuting the suit include California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Nevada, New Hampshire, New York, Tennessee, Texas, Virginia, Wisconsin and the District of Columbia.  These states each have their own whistleblower statutes which, like the federal False Claims Act, allow a whistleblower to bring claims of fraud on behalf of the government.

The 17 states seeking to join the suit are Colorado, Kansas, Kentucky, Maine, Maryland, Minnesota, Nebraska, New Jersey, North Carolina, Oregon, Rhode Island, South Dakota, Utah, Vermont, Washington, and Wyoming.

The United States and 16 states also joined a second whistleblower suit filed in the District of Massachusetts against Wyeth and making similar allegations. 

To view a copy of the Department of Justice’s press release announcing the lawsuit against Wyeth, click here.

If you would like to learn more about Berger & Montague’s Whistleblower / Qui Tam Group, click here.