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Medicaid lawsuit filed against Wyeth

Wyeth is at the centre of lawsuits over alleged failure to provide the US government with discounts for its drugs

Wyeth is at the centre of joint lawsuits brought by the US Department of Justice and 16 states over alleged failure to provide the government with discounts for its drugs.

The pharma giant is accused of failing to provide the government with the same discounts for two drugs used to suppress stomach acid, Protonix Oral and Protonix IV, which it offered to private purchasers such as hospitals. The duty to pass the discount on to the government is a legal requirement of the Medicaid Drug Rebate Programme.

"The best price reporting requirement is designed to assure that the nation's healthcare programmes for the poor, the Medicaid programmes, are treated equally with drug companies' best commercial customers," said Michael K Loucks, Acting US Attorney for the District of Massachusetts.

The lawsuits relate to a deal struck between Wyeth and thousands of hospitals between 2000 and 2006. Under the arrangement, known as the Protonix Performance Agreement, hospitals were required to buy both the intravenous (IV) and oral drug together as a 'bundle' in return for a substantial discount.

The deal benefited Wyeth, as they gained access to the outpatient market — hoping that patients treated with the IV variant of the drug while in hospital, would opt to purchase Protonix Oral for use when they return home. Hospitals who met certain market share requirements were entitled to discounts of up to 94 per cent and 80 per cent off the list prices of Prontonix Oral and Protonix IV, respectively.

Under the terms of the Medicaid Drug Rebate Programme, Wyeth was required to determine the effective prices paid by the hospitals under the bundling agreement, and to pass the discounts on to the state as rebates. It is alleged that Wyeth failed to do this and therefore avoided paying hundreds of millions of dollars to Medicaid.

Tony West, Assistant Attorney General for the Civil Division said: "By offering massive discounts to hospitals, but then hiding that information from the Medicaid programme, we believe Wyeth caused Medicaid programmes throughout the country to pay much more for these drugs than they should have."

19th May 2009

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