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Hawaii recovers $400K in Medicaid drug rebate settlement


    Wyeth headquarters in Madison, N.J., is seen in this April 28, 2004 photo.

Hawaii will recover more than $400,000 from a pharmaceutical products distributor that underpaid Medicaid drug rebates, state Attorney General Doug Chin announced today in a news release.

Drugmaker Pfizer Inc. agreed to pay nearly $785 million to the federal government and states to resolve allegations that one of its companies failed to give Medicaid the same discounts it provided to private purchasers of a heartburn treatment, federal prosecutors announced.

The state agreed to the settlement against Wyeth, a subsidiary of Pfizer, Inc., resolving allegations that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales of Protonix Oral and Protonix IV between 2001 and 2006.

The settlement stems from two whistleblower lawsuits filed in Massachusetts. The United States, 35 states including Hawaii, and the District of Columbia intervened in the lawsuits.

Hawaii will receive $420,337.77 as its share under the settlement.

Wyeth gave thousands of hospitals deep discounts on two versions of the heartburn and acid reflux prescription Protonix between 2001 and 2006, but failed to report those prices to the government as required by law so Medicaid can receive the same discounts, prosecutors said.

Wyeth was also trying to boost profit, prosecutors said. By inducing hospitals to use Protonix instead of comparable medications, prosecutors said patients discharged from the hospital on Protonix were likely to stay on the drug for long periods of time, during which insurers and Medicaid would pay nearly full price.

“This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs,” said U.S. Attorney Carmen Ortiz said.

The case involved alleged conduct by Wyeth before New York-based Pfizer acquired the company in 2009.

Protonix Oral and Protonix IV are in a class of drugs called Proton Pump Inhibitors, which inhibit the production of gastric acid.

The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 as a cost containment measure for Medicaid’s payment for outpatient drugs.

The settlements were negotiated by a team of states working with the Department of Justice, the U.S. Attorney’s Office for the District of Massachusetts, and the U.S. Department of Health and Human Services Office of Inspector General.

“We are pleased to have finalized the agreement to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before we acquired Wyeth,” said Doug Lankler, Pfizer’s executive vice president and general counsel. “The resolution of these claims reflects our desire to put these historic cases behind us and to focus on the needs of patients.”


The Associated Press contributed to this story.

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  • Just the tip of the iceberg, the drug industry is a major driver of the annual increases in healthcare costs. American consumers effectively finance drug research for the whole world. Drug companies sell their drugs to other countries for a fraction of the costs charged in America.
    Congress and the president could stop it but they won’t because that’s where much of their campaign money comes from. You can’t help but wonder how long it will be before our entire unsustainable healthcare system falls apart. The current generation of retirees are lucky people, they have it better than any previous and likely future generation.

    • Not only are we being gouged by pharmaceutical companies but we do not have systems in place such as those in other countries to help stop overcharging. See the recent case involving Martin Shkreli and how he managed to buy the rights to an old drug and then charged the public an astronomical amount for it. If a single man can do it, can you imagine how much big pharmaceutical conglomerates can get away with?

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