BOISE, Idaho (News Release) – Attorney General Lawrence Wasden says Idaho has reached an agreement to settle allegations that Wyeth, a wholly owned subsidiary of Pfizer, Inc., knowingly underpaid rebates owed under the Medicaid Drug Rebate Program between 2001 and 2006.

Under the settlement Wyeth will pay $784.6 million to the United States and the States. More than $371 million of this amount will go to the Medicaid Program. Idaho will receive $450,024 under the settlement.

The settlement stems from two whistleblower lawsuits that were filed in the U.S. District Court for the District of Massachusetts. The United States, 35 states and the District of Columbia intervened in the lawsuits.

The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 as a cost containment measure for Medicaid’s payment for outpatient drugs. The Medicaid Drug Rebate Program requires participating pharmaceutical manufacturers to pay quarterly rebates to State Medicaid programs for each of its drugs sold to pharmacies that were reimbursed by Medicaid.

The quarterly rebate was determined from each pharmaceutical manufacturer’s reported “Best Price,” or the lowest price for which it sold a covered drug in a particular quarter.

In their court filings, the government plaintiffs alleged that during the third quarter 2001 through 2006, Wyeth sold Protonix Oral tablets and Protonix IV to hospitals at discounted prices.

The governments alleged that Wyeth’s contracts with the hospitals created a bundled sale under the terms of the Medicaid Drug Rebate Agreement by linking discounts available to participating hospitals for Protonix IV to discounts on Protonix Oral tablets.

However, Wyeth did not treat the sales of Protonix Oral tablets and Protonix IV as bundled within the meaning of the Medicaid Drug Rebate Program and therefore failed to properly allocate the discounts available under the contract.

As a result of this failure, Wyeth falsely reported its Best Prices for Protonix Oral tablets and Protonix IV thereby causing the Unit Rebate Amount for Protonix Oral tablets and Protonix IV, which is used to determine the quarterly rebate to pay the State for each drug, to be understated during the Relevant Period.

The governments alleged that Wyeth concealed, avoided or decreased its obligation to pay Medicaid Drug Rebates to the State for Protonix Oral tablets and Protonix IV.

Because the Medicaid program is jointly funded by the federal and State governments, Pfizer will pay in excess of $413 million of the $784.6 million to the United States.

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