Pfizer pays $785 million to resolve drug pricing allegations

Pfizer agreed to pay the federal government nearly $785 million after one of its subsidiaries failed to provide drug rebates to Medicaid for heartburn medication, according to the Department of Justice.

Federal prosecutors alleged that between 2001 and 2006, Wyeth concealed deep discounts on several acid reflux medications offered to thousands of hospitals around the country. In doing so, the pharmaceutical company avoided paying hundreds of millions in drug rebates to Medicaid.

Wyeth also conceived of a bundled payment arrangement in which hospitals earned deep discounts on Protonix Oral and Protonix IV by including heartburn medications on their formulary. Patients typically continued taking the medications long after they were discharged from the hospital, leaving Medicaid and commercial insurers to pay elevated prices.

Pfizer purchased Wyeth in 2009, the same year federal prosecutors filed the complaint against the company. That same year, Pfizer paid a record $2.3 billion settlement to resolve allegations of off-label marketing of several drugs.

Last year, AstraZeneca and Cephalon paid $54 million collectively to settle claims they knowingly underpaid Medicaid drug rebates. The Office of Inspector General previously found drug rebates were substantially higher in Medicaid compared to Medicare Part D.

For more:
- here's the DOJ announcement

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