SOUTH DAKOTA AND 16 OTHER STATES MOVE TO JOIN SUITS AGAINST PHARMACEUTICAL GIANT, WYETH

Drug Company Allegedly Failed to Pay Hundreds of Millions In Rebates to Medicaid Programs Across the Country

PIERRE, S.D.-   Attorney General Marty Jackley announces today that South Dakota and sixteen other states filed a joint motion for leave to intervene in two whistleblower lawsuits against the drug manufacturer Wyeth. The suit alleges that the company knowingly failed to report certain discounted prices of its drugs as required by laws governing the Medicaid program. As a result, Wyeth allegedly avoided paying hundreds of millions in rebates due to state Medicaid programs for its drugs, Protonix Oral and Protonix IV.  These drugs belong to a class of drugs known as proton pump inhibitors (PPI), which are used to suppress stomach acid.  

Under the Medicaid Drug Rebate Program, drug manufacturers are required to report to the government certain prices they charge their customers, including the “best price” offered for their drugs.  They also are required to pay rebates to the state Medicaid programs which are calculated based on the reported discounted prices offered to other customers.  Congress created the Medicaid Drug Rebate Program in order to ensure that Medicaid, the nation’s provider of health insurance to the poor and the disabled and one of the largest purchasers of drugs, receives the benefit of the same discounts offered to other large commercial customers in the marketplace.

Between 2001 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for Protonix Oral and Protonix IV under pricing arrangements known as “Protonix Performance Agreements” that offered discounted prices based on certain conditions, such as market share or placement on formularies.  The States allege that Wyeth was required under the Medicaid Drug Rebate Program to report these prices paid by hospitals under this arrangement, and to pass along the benefit of the lower prices to the state Medicaid programs. Wyeth allegedly failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in rebates.

“We are alleging that Wyeth broke a promise to our Medicaid program by hiding rebates,” said Jackley. “If the South Dakota Medicaid program paid more than they should have for these drugs, we intend to recover that money for South Dakota.” 

The case is being handled by the South Dakota Office of Attorney General, Medicaid Fraud Control Unit.  Last year, the United States and 16 other named plaintiff states intervened in these two whistleblower lawsuits now pending in the United States District Court for Massachusetts.  By intervening in the suits, South Dakota seeks damages from Wyeth on behalf of its Medicaid program.