Pfizer announced last month that it had reached “an agreement in principle” with the U.S. government and expects to pay $785 million to resolve a pair of whistleblower complaints that accused the drug giant’s Wyeth unit of cheating Medicaid out of discounts it made available to other customers.

The announcement signaled the end of a decade-long legal battle between the New York-based drug giant and whistleblowers who accused it of withholding discounts from the Medicaid program for Wyeth’s oral and intravenous forms of Protonix, a drug used to treat heartburn by reducing stomach acid.

Medicaid’s “best price” provision requires pharmaceutical companies to offer Medicaid the same discounts and rebates on prescription drugs that they offer hospitals and other health care providers. Failure to provide the best price to Medicaid – and other federal health care programs for that matter – constitutes a submission of false claims when seeking reimbursements for those drugs.

The complaints against Pfizer were filed under the False Claims Act more than 10 years ago by whistleblowers Lauren Kieff, a former hospital-based specialist for AstraZeneca, and Dr. William LaCorte, a hospital physician who frequently prescribed Protonix for his patients. Wyeth’s alleged misconduct occurred from 2001 to 2006. After investigating the claims, the U.S. Justice Department opted to intervene in 2009 and became actively involved in the litigation.

Whistleblowers whose qui tam complaints result in a recovery for the U.S. government are awarded between 15 and 30 percent of the total amount recovered, which means that Ms. Kieff and Dr. LaCorte could share an award between $117.75 million and $235.5 million if the agreement is approved.


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