Two whistleblower suits against Wyeth just gained some heavyweight clout. The U.S. Justice Department and 16 states have joined the lawsuits, which accuse Wyeth of defrauding the government by discounting Protonix for hospitals without offering the same price breaks to Medicaid.
As you know, drugmakers are required to give Medicaid their "best prices" on every product. If other buyers get discounts, then the drugmakers have to rebate the difference to state Medicaid administrators. But these suits allege that Wyeth gave some deep discounts on Protonix to hospitals--as much as 94 percent in certain cases. And instead of passing along the same deal to the government, Wyeth simply didn't pay the required rebates, the lawsuits allege.
The rebates would have been hundreds of millions of dollars, the suits claim. And that's quite a chunk of change--for Wyeth to pay and for the feds and states to collect. So this is a big-time dispute, in which the feds and states toss around words like "defraud" and Wyeth announces its intent "to vigorously defend itself in these actions." (Have you ever heard a company say it planned to defend itself lackadaisically?)
Of course, Wyeth isn't alone in finding itself subject to Medicaid-rebate claims. As the Wall Street Journal points out, Merck agreed to pay $250 million last year to settle a similar suit over its heartburn drug Pepcid.