State’s Rx lawsuit share: $3M

Arkansas will receive more than $3 million from a settlement over allegations that a New Jersey-based drug company overcharged state Medicaid programs for prescription drugs from 2001 to 2006, Attorney General Leslie Rutledge announced Friday.

New York-based Pfizer agreed to pay the federal government, 34 states and the District of Columbia a total of $784.6 million under the settlement, which involves drugs sold by Madison, N.J. based Wyeth. Pfizer acquired Wyeth in 2009.

According to a U.S. Department of Justice news release on Wednesday, Wyeth was accused of failing to report deep discounts that it gave to hospitals on the price of two proton pump inhibitor drugs, which are used to treat stomach ulcers and acid reflux.

The omission allowed Wyeth to avoid paying hundreds of millions of dollars in rebates to state Medicaid programs, according to the Justice Department release.

According to Rutledge’s release, such rebates are calculated based on the lowest price paid by a purchaser each quarter and ensure that state Medicaid programs receive the same discounts offered to other large purchasers.

The allegations stemmed from lawsuits filed by two people on behalf of the federal government under the U.S. False Claims Act. The law allows private parties to sue on behalf of the federal government and receive a share of the proceeds from a judgment or settlement.

Under the settlement, Pfizer will pay $413 million to the federal government and $371 million to state Medicaid programs.

The agreement also calls for the federal and state governments to pay $98 million to the plaintiffs in the False Claims Act case, according to the Justice Department release.