The Department of Justice (“DOJ”) recently entered into a settlement of a quit tam lawsuit against Pfizer, Inc. and Wyeth, LLC. We previously wrote about this settlement back in February, when an “agreement in principle” was reached between Pfizer and the United States government.
As a refresher, allegations were made by Lauren Kieff, a former hospital sales representative for AstraZeneca Pharmaceuticals, LP, and William St. John LaCorte, a physician, that Wyeth engaged in healthcare fraud from 2001 to 2006. These allegations covered two medications, both commonly used to treat acid reflux disease, Protonix Oral and Protonix I.V. Shortly after bringing Protonix I.V. to market, Wyeth found that it was not selling well and began to offer bundle sales on both of their PPI drugs if they were purchased together.
Allegedly, Wyeth thought that if patients were discharged from the hospital on Protonix Oral, they were likely to stay on the drug for long periods of time, rather than switch to competing Proton Pump Inhibitors (PPIs) of which there are many. While the patients remained on the drug after discharge, they, including Medicaid, would pay nearly full price for the drug.
The actions taken by Wyeth, prior to the Pfizer merger, allegedly included failing to inform Medicaid about the discounts that it was offering to its private purchasers, such as hospitals. Wyeth’s failure to inform Medicaid about the bundled discounts it was offering and providing to its hospital customers, was a violation of the False Claims Act (“FCA”). Pharmaceutical companies are supposed to pay rebates to state Medicaid programs so that they receive the same discounts given to private customers.
Settlement Terms
The settlement requires Wyeth and Pfizer to pay $784.6 million, split between a Federal Settlement Amount ($413, 248,820) and a Medicaid State Settlement Amount ($371,351,180). The state settlements were negotiated by attorneys general in Indiana, Massachusetts, New York, and North Carolina, working with the United States Attorney’s Office for the District of Massachusetts, the U.S. Department of Health and Human Services Office of Inspector General, and the United States DOJ.
As is typical in these types of settlements, the settlement does not include an admission of liability by Wyeth.
This settlement once again reinforces the emphasis the government has placed on combating healthcare fraud. The partnership between the DOJ and Health and Human Services has resulted in recoveries totaling more than $29 billion through False Claims Act cases, with more than $17.5 billion of that amount recovered in cases involving fraud against federal healthcare programs.
Another Payday for LaCorte
As we wrote in our previous article, Dr. LaCorte is notorious for bringing qui tam suits against pharmaceutical companies. He has brought at least twelve whistleblower cases, with 6 winning settlements, and one still pending. He, however, insists that he doesn’t do it for the money and that the cases just fall into his lap.
This settlement will result in $98,058,190 being split between both relators, paid from the proceeds of the federal and state settlements. According to the settlement documents, Relator LaCorte will receive $64 million, as well as reasonable attorneys’ fees and costs.