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Vermont And 16 Other States Move To Join Suits Against Pharmaceutical Giant, Wyeth

CONTACT: Edward A. Baker, Assistant Attorney General, (802) 828-5511

May 10, 2010

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

Attorney General William H. Sorrell announced today that Vermont and sixteen other states have filed a joint motion to intervene in two whistleblower lawsuits against the drug manufacturer Wyeth. In the motion and accompanying complaint, filed last Friday, the States allege that Wyeth 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 of dollars in rebates owed to state Medicaid programs for its drugs, Protonix Oral and Protonix IV. "Vermont should not be forced to pay a premium price for these important drugs when it is entitled to a discount. By intervening in this case, we are attempting to protect the fiscal integrity of Vermont's Medicaid program, and the health of the many Vermonters who depend upon it," said Attorney General Sorrell.

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, which are used to suppress stomach acid, under pricing arrangements known as “Protonix Performance Agreements.” These arrangements 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 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.

Vermont's role in the case, now pending in the United States District Court for Massachusetts, is being handled by the Office of Attorney General's Medicaid Fraud and Residential Abuse Unit. By intervening in the suits, Vermont seeks damages from Wyeth on behalf of its Medicaid program.

  Website consulting provided by The National Association of Attorneys General.