Trial set for Pfizer in Protonix Medicaid rebate case it inherited

A federal judge's inclination means Pfizer ($PFE) could remain in the line of fire to pay out more than $2 billion. That is the potential liability Pfizer faces for a federal lawsuit accusing its Wyeth unit of failing to pay Medicaid rebates for stomach upset drug Protonix.

U.S. District Judge Douglas Woodlock told the drugmaker on Tuesday in federal court in Boston that he will file his decision within two weeks. According to notes filed in the case, Woodlock said he is leaning toward denying the request, filed by Pfizer four years ago, that the lawsuit be dismissed. He set a trial date for next year but also gave Pfizer a chance to file "supplemental briefs" on its motion for summary judgment.

A Pfizer spokesperson told The Wall Street Journal that the company believes the government's allegations have no merit.

Pfizer inherited the allegations when it bought Wyeth, which had been sued by the Justice Department and 17 states for allegedly avoiding hundreds of millions in Medicaid rebates. It claims that Wyeth offered big discounts to hospitals for its injectable and oral forms of Protonix for making bulk purchases but then failed to pass along the lower prices to Medicaid, which is supposed to get the best price offered on every drug. Pfizer has negotiated with the Justice Department over a settlement and in those documents it was pointed out that its exposure could be north of $2 billion.

If Pfizer were to face paying out that kind of money, it would be almost exactly the same amount it and Takeda won two years ago in a settlement with Teva ($TEVA) and Sun Pharmaceutical Industries on their at-risk launch of generics of Protonix. The settlement came after their copies for the acid reflux drug were found to violate its patent. Sun agreed to pay $550 million and Teva the rest.

- read the WSJ story (sub. req.)

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