Pfizer Pays $785 million to Resolve a 14-year-old Lawsuit

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Pfizer Inc. (New York City) agreed to pay nearly $785 million to resolve a 14-year-old lawsuit claiming its Wyeth unit overcharged the government by hiding the discounts it was giving hospitals for drugs used to treat acid-related damage to the esophagus.

The hidden discounts meant that Medicaid paid “hundreds of millions of dollars” more for the drugs than it should have from 2001 to 2006, according to a statement Wednesday from U.S. Attorney Carmen Ortiz in Boston.

Pfizer, which acquired Wyeth in 2009, announced the broad terms of the agreement in February. The accord covers bundled discounts given for Protonix Oral and Protonix IV.

This settlement demonstrates our unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal healthcare programs,” Benjamin C. Mizer, deputy assistant attorney general at the Department of Justice, said in a separate statement.

Several other drugmakers have resolved cases accusing them of failing to give Medicaid required drug discounts related to the best prices offered to private purchasers. Under the Pfizer accord, $413.2 million will go the U.S. and $371.4 million to state governments. Pfizer didn’t admit liability in the settlement.

The settlement resolves two lawsuits filed under the False Claims Act, which lets citizens sue on behalf of the government and share in any recovery. Two whistle-blowers, Lauren Kieff and William St. John LaCorte, will share $98.1 million, according to the Department of Justice.

LaCorte, a physician in New Orleans, will get $64 million plus interest, according to the settlement agreement. He sued in 2002, while Kieff, a former hospital sales representative in Massachusetts for AstraZeneca PLC (London), sued a year later.

LaCorte claimed that Wyeth sold Protonix Oral tablets to hospitals for as low as 16 cents per tablet while not reporting that price to federal programs, according to the settlement.

“This was my 14-year, get-rich-quick scheme,” said LaCorte. “I must not have been thinking straight or I wouldn’t have done it.”

LaCorte said he lives modestly despite sharing an earlier award with other whistle-blowers when Merck & Co. (Kenilworth NJ) agreed in 2008 to pay more than $649 million to resolve federal and state claims on drug pricing. He estimated that he collected $34 million in the Merck case, and said he has won other cases involving drugmakers.

Monday, May 2, 2016 / Vol. 24 / No. 17