Pfizer and the United States government reached an “agreement in principle” on February 16, 2016 regarding two whistleblower complaints that accused the Wyeth unit of Pfizer of cheating Medicaid out of discounts the company made available to other customers. This agreement says that Wyeth/Pfizer will make a payment of $784.6 million to the government to resolve those claims. The deal is still subject to negotiation of a final agreement and court approval; a trial had been scheduled to begin March 7, 2016, in federal court in Boston, MA. The judge that was set to hear the cases has dismissed them because of the proposed settlement.
The Claims
The Claims were filed over a decade ago by Lauren Kieff and William LaCorte, MD, Ms. Kieff is a former hospital-based AstraZeneca specialist and Dr. LaCorte is a hospital physician who often prescribed Protonix, a drug used to treat heartburn by reducing stomach acid. Both Ms. Kieff and Dr. LaCorte accused Wyeth of violating the False Claims Act by overcharging the Medicaid program for the drug.
Interestingly, Dr. LaCorte has made somewhat of a career out of filing whistleblower cases, and is successful about 50% of the time; so far, he has brought twelve whistleblower cases, two of which are still pending, and of the ten settled, he won five of them. According to him, he isn’t doing it for the money and doesn’t seek the cases out, but instead, they fall into his lap.
The complaints asserted that Wyeth violated Medicaid’s “best price” provision, which mandates that companies offer Medicaid the same discounts and rebates on prescription drugs that they offer to hospitals and other health care providers. The complaint alleges that this violated resulted in millions of dollars in overpayment from Medicaid between 2001 and 2006.
Proposed Settlement
This settlement follows a settlement Pfizer made a few years back on Wyeth’s behalf. The previous settlement was for $55 million, and was also connected to Protonix, resolving allegations that Wyeth promoted Protonix for uses that were not approved by the Food and Drug Administration (FDA) – off-label promotion.
The proposed settlement would resolve cases that are currently pending in federal court focused on Wyeth’s practices related to rebates on Protonix sales from 2001 to 2006, when the Protonix patent and market exclusivity were still in force. As is common, Wyeth is not admitting any liability.
While this proposed settlement is still a hefty amount, the Justice Department had previously stated in court documents that they felt as though Wyeth’s liability in the case should exceed $2 billion.
For the whistleblower portion (reward) of the settlement, Ms. Kieff and Dr. LaCorte could split between fifteen and thirty percent of the total amount recovered, in this case, between $117.75 million and $235.5 million, if the settlement is approved.
Pfizer Reaction
Doug Lankler, Pfizer executive vice president and general counsel, stated that, “the resolution of these cases reflects a desire by the company to put these cases behind us and to focus on the needs of patients.” It is important to note that these actions by Wythe were taken prior to Pfizer acquiring the company in 2009.
Pfizer is also adjusting its financial results from Q4 to reflect the settlement charge. The company’s Q4 results now show a loss of $172 million, compared to the $613 million profit earlier this month.
What Does This Mean?
This settlement is the latest in a series of settlements (following in the footsteps of GlaxoSmithKline, Johnson & Johnson, and Abbott Laboratories) of United States government investigations of drug companies’ marketing tactics, pricing practices, and other activities in the past decade.
With whistleblower settlements and government investigations into private companies continuing and becoming more frequent, it is important for pharmaceutical companies to be aware of the laws that bind them, and to have a solid compliance team in place to ensure complete compliance with the laws. The laws are oftentimes complex and can be confusing, but Policy and Medicine and our sister publication, Life Science Compliance Update (sub req), try to help compliance professionals sift through these laws and regulations.