Pfizer Settles False Claims Act Case for $785M – Lessons (Not) Learned From Previous Cases

It is another week, and yet another multi-million dollar False Claims Act (“FCA”) settlement.  However, this one nears the billion dollar mark and exemplifies a common theme of the government joining the whistleblower lawsuit when the stakes are high.  In this case, Pfizer agreed to pay $785 million to settle claims over overcharging Medicaid for the heartburn drug Protonix.  In a nutshell, the pharmaceutical company (Wyeth was acquired by Pfizer) offered Protonix at a discount to hospitals but did not extend the same discount to the Medicaid beneficiaries after their discharge.  Of course, since the beneficiaries were prescribed the discounted Protonix while they were inpatients, their physicians continued to prescribe the Protonix post-discharge.

Among its many provisions, Medicaid requires companies to offer it a “best price” where it may not be charged a higher market price than what is the offered to other covered entities like hospitals and nursing homes.  Primarily, this is the reason why such laws were set in place – to inhibit pharmaceutical companies from capturing market share with heavily discounted drugs which must then be continued once patients are sent home to recover.  The discounts also swayed the physician’s medical judgment, increased their loyalty and negated other companies’ attempts at competition.  These and other marketing mechanisms are commonly caught by whistleblowers (as was the case here by a competing salesperson and a physician) and turned into large-scale whistleblower lawsuits.

In a similar case, another pharmaceutical giant Merck and Co. agreed to settle a case for $650 million over allegations that it also overcharged Medicaid by illegally compensating health care providers to prescribe its medications such as Vioxx and Pepcid.  In this instance, it was an internal whistleblower who blew the whistle and received almost $68 million as part of his federal and state FCA payouts.  As part of the aforementioned “best price” requirement, Merck was required to report to the government the best prices that it offered, but neglected to do so.  In addition, Merck also compensated physicians for prescribing its products by creating sham pretexts such as paying the doctors for market research and consulting when these payments were actually unlawful kickbacks.  See these other blogs for similar FCA cases.

If you witness any potential false claims (i.e. requests for reimbursement to the government or not actually rendering work when reimbursement is received) by your company or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is crucial.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.