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Wyeth accused of overcharging for drugs
Updated 5/18/2009 5:42 PM ET
WASHINGTON (AP) — The Justice Department on Monday accused Wyeth, one of the nation's biggest drugmakers, of cheating Medicaid programs out of hundreds of millions of dollars by overcharging for a stomach acid drug.

The Justice Department and more than a dozen states have joined in two whistle-blower lawsuits against the Madison, N.J.-based drug company filed in federal court in Massachusetts.

The court papers claim that between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals for two versions of Protonix, a drug that suppresses stomach acid.

By law, manufacturers of brand-name drugs are required to offer the same rebates to state Medicaid programs that they provide to other customers.

The government claims the maneuver helped the company avoid paying hundreds of millions of dollars in rebates to Medicaid, a health care program for the poor that is funded by state and federal money.

"By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have," Assistant Attorney General Tony West said in a statement.

In court papers, the government accused the drug company of bundling the intravenous version of Protonix with the oral version in sales packages to hospitals, in the hopes of making more money in the lucrative outpatient market.

Wyeth defended its pricing plan.

"The company believes that it's pricing calculations were correct and intends to defend itself vigorously in these actions," said Doug Petkus, a Wyeth spokesman.

The states joining the lawsuit are California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin, as well as the District of Columbia.

New York-based drugmaker Pfizer Inc. is in the process of acquiring Wyeth for more than $60 billion in a deal expected to close later this year.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Posted 5/18/2009 5:15 PM ET
Updated 5/18/2009 5:42 PM ET