Drug giant Pfizer Inc. has revealed it reached an agreement in principle to pay $784.6 million to resolve allegations that it systematically overcharged Medicaid for the heartburn drug Protonix.
Merely weeks before the trial, which was scheduled to begin in Boston on March 7th, Pfizer and the US Department of Justice have reportedly agreed to settle according to the Wall St. Journal, although the final agreement and court approval are still pending.
The alleged overcharging was brought to light by whistleblower William LaCorte, a doctor based in Louisiana. LaCorte is no stranger to whistleblower lawsuits and rewards. He has been awarded millions of dollars from settlements in False Claims lawsuits, most notably the one against Merck & Co, which ended with a recovery of $250 million. The Merck & Co. lawsuit was also related to overcharging for a heartburn drug.
Pfizer’s Alleged Medicaid Healthcare Fraud Scheme in Wyeth Unit
The alleged overcharging by Pfizer was carried out by its Wyeth unit. There was another lawsuit against Pfizer in process, filed by Lauren Kieff, a former sales rep at AstraZeneca PLC, but her case was dismissed by a federal judge due to the proposed settlement in the lawsuit initiated by LaCorte.
The Department of Justice has reached several lucrative settlements with major drug companies in investigations of their questionable marketing tactics and pricing practices over the last decade. The lawsuit against Pfizer, in particular, alleged that Wyeth systematically failed to offer Medicaid the discounts it had given to hospitals on the drug Protonix. According to the Department of Justice, the actual damages that resulted from this practice could amount to over $2 billion.
“We are pleased to have reached an agreement in principle to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before Pfizer acquired Wyeth,” Pfizer´s executive vice president and general counsel Doug Lankler has commented.
Medicaid Whistleblower LaCorte Reward Calculates to $59 Million
LaCorte, whose track record has made some refer to him as a “serial whistleblower” explained his motivations when asked to comment on the proposed settlement, "I have respect for pharma companies that do things in the right way but not for those that have fourth rate drugs that haven't been properly tested which they pay doctors to prescribe."
When the settlement is finalized, LaCorte could receive a reward of $59 million, which, added to his past share in previous recoveries, will get his total whistleblower rewards close to $100 million.