Pfizer Agrees to Pay $784.6 Million to Settle False Claims Act Case

Pharmaceutical company Pfizer announced on February 16, 2016 that it reached an agreement in principle to pay $784.6 million to settle allegations that its Wyeth unit overcharged Medicaid for the heartburn drug Protonix.  The settlement is the result of a False Claims Act suit filed by the Department of Justice against Wyeth in 2009.  The suit alleged that between 2001 and 2006 Wyeth did not provide state Medicaid programs the same price discounts for Protonix that it provided to non-government customers.  This practice was alleged to be illegal because Medicaid is entitled to the lowest price on prescription drugs and drug makers are required to pay rebates to Medicaid of any discounts offered to other purchasers.   Pfizer acquired Wyeth in January 2009.

The allegations were originally brought by whistleblowers in two qui tam lawsuits.  Then, in 2009, the Department of Justice and 16 states joined and consolidated the qui tam actions.  The case was scheduled to begin trial March 7 in federal court in Boston.  The proposed $784.6 million settlement is subject to negotiation of a final agreement and court approval.

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