Download Pfizer to Pay $784.6 Million in False Claims Act Settlement 02.26.2016

Author: Robinson & Cole LLP
Date: February 26, 2016
Pfizer to Pay $784.6 Million in False Claims Act Settlement
Drug manufacturer Pfizer Inc. (“Pfizer”) recently agreed to pay $784.6 million to settle False Claims
Act (“FCA”) suits alleging that it failed to provide to state Medicaid programs the same price discounts
for heartburn drug Protonix that it provided to certain nongovernment customers between 2001 and
2006.
The settlement concludes a long-running U.S. government investigation of Pfizer. It will resolve the
lawsuit filed by the U.S. Department of Justice in 2009, as well as allegations contained in two earlier
whistleblower lawsuits filed against the company.
The FCA claims were specifically alleged against Pfizer’s Wyeth unit, a pharmaceutical company
purchased by Pfizer in 2009. The crux of the lawsuit was that discounts offered to hospitals that
purchased oral and intravenous versions of Protonix were not also offered to Medicaid, thereby violating
the program’s “best price” provision. “Wyeth undermined the fundamental objective of the [Medicaid
Drug Rebate Program] by reporting best prices for Protonix Oral and Protonix IV that did not reflect the
deep discounts on those drugs that Wyeth made available to thousands of hospitals nationwide through a
bundled pricing arrangement,” the complaint said. Court documents also allege that the discounts
helped Wyeth gain physician loyalty and keep patients on Protonix’s oral version after discharge,
thereby generating more prescriptions with inflated prices. “Wyeth used the bundled hospital discounts
as a marketing tool to drive ‘spillover’ retail sales of Protonix Oral, which Medicaid and other insurers
then covered at much higher prices,” the complaint states.
Pfizer has reported that the settlement does not require any admission of wrongdoing on its part, since
the alleged misconduct occurred before its 2009 acquisition of Wyeth. The settlement is currently just
an “agreement in principle,” subject to a final settlement agreement and court approval.