Pfizer to Pay $2 Billion for Failing to pay Medicaid Rebates for Drug Protonix

Pfizer to Pay $2 Billion for Failing to pay Medicaid Rebates for Drug Protonix

Pfizer, a spin-off of the Monsanto Corporation, faces a $2 billion lawsuit that accuses its Wyeth unit of failing to pay Medicaid rebates for a stomach drug called Protonix. Pfizer already had to pay more than $55 million in 2013 for illegally promoting the drug for unapproved uses.

Protonix belongs to a class of widely-used medicines called proton pump inhibitors (PPI). Protonix was approved by the FDA for short-term treatment of erosive esophagitis – a condition related to gastro-esophageal reflux disease, or GERD, that can only be diagnosed via endoscopy.

The Justice Department claims that even though the drug was only approved for a limited purpose, Wyeth trained its sales force to promote Protonix for all forms of GERD. By promoting the drug as appropriate for far more commonly diagnosed forms of GERD, Wyeth was aiming for significantly higher sales. Not a big surprise is it? Pfizer’s annual sales amount to between 50 and 65 million annually in the US alone.

The Justice Department also claims that Wyeth offered big discounts to hospitals for its injectable and oral forms of Protonix for making bulk purchases, but then failed to pass along the lower prices to Medicaid, which is supposed to get the best price offered on every drug.

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According to the Centers for Medicare & Medicaid Services (CMS), spending on Medicaid, the jointly funded state-federal welfare program that provides health benefits to low-income people, increased 6.7% in 2013 to $449.5 billion. Is this one of the reasons why?

Even with a settlement for the latest case, Pfizer is allowed to continue selling the drug.

Moreover, the world’s largest drug maker will likely be unaffected by either lawsuit, since consequences are simply a slap on the wrist monetarily compared to the company’s total receipts for this and other drugs worldwide.