Attorney General’s office joins lawsuits against pharmaceutical manufacturer for

The Delaware Attorney General’s Office announced today that it is joining the
federal government, 14 states, and the District of Columbia in two whistleblower lawsuits in federal
district court against the drug manufacturer Wyeth. The suits allege that Wyeth knowingly failed to
report accurate pricing for its drugs Protonix Oral and Protonix IV and avoided paying hundreds of
millions of dollars in rebates due to the Medicaid Program.

Congress created the Medicaid Drug Rebate Program in order to ensure that Medicaid received
the benefit of the same discounts offered by drug manufacturers to large commercial customers in the
marketplace. Under the program, drug manufacturers of branded drugs are required to report certain
drug pricing information to the government, including the “Best Price” offered for their drugs, and to
pay rebates to state Medicaid programs based on those reported prices. The Medicaid Program is one
of the largest purchasers of drugs in the United States and the nation’s provider of health insurance to
the poor and the disabled.

Between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide
for Protonix Oral and Protonix IV, which belong to a class of drugs known as proton pump inhibitors
and are used to suppress stomach acid. These discounts were offered to hospitals under a bundled
pricing arrangement known as the Protonix Performance Agreement in order to gain access to the
lucrative retail outpatient market. Under the Protonix Performance Agreement, hospitals that placed
both products on their formularies and attained certain market share requirements were entitled to up to
a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV.

Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective
prices paid by hospitals under this arrangement and to pass along the lowest prices to state Medicaid
programs, it failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in

The Delaware Medicaid Fraud Control Unit played a significant role in the investigation of the
allegations, including subpoenaing hundreds of thousands of documents from Wyeth and coordinating
the review of those documents. Delawareans are urged to report suspected Medicaid fraud to the
Attorney General’s Medicaid Fraud Control Unit at (302) 577-5000.
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