Protonix Settlement to Result in $784.6M Payment by Pfizer in Medicare Fraud Case

Pfizer has agreed to pay $784.6 million to resolve claims that its Wyeth unit cheated the government out of hundreds of millions of dollars by selling certain versions of the heartburn drug Protonix to hospitals at hidden discounts, resulting in hefty Medicaid overpayments. 

The Department of Justice announced the Protonix settlement on Wednesday, concluding an investigation that has been on-going for many years.

Pfizer gave no admission of guilt as part of the deal, and the conduct ceased three years before Pfizer purchased Wyeth in 2009, according to the Justice Department. Two individuals who brought the case to the government’s attention through a whistleblower lawsuit will share nearly $100 million in compensation under the qui tam provision of the False Claims Act of 1863.

According to allegations raised in the Medicare fraud case, Wyeth sold Protonix Oral and Protonix IV to hospitals at a heavy discount to encourage their use. These bundled discount programs required that the drugs be placed on the hospital’s formulary to make them available in the hospital.

Wyeth allegedly initiated the program since it believed that patients given Protonix in the hospital would likely stay on the drug once they were discharged. However, since Medicaid never knew about the discounts, it ended up reimbursing for the full cost of the drugs, resulting in hundreds of millions of dollars in overpayments.

“This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs,” U.S. Attorney Carmen Ortiz, of the District of Massachusetts, said in the press release. “This settlement, after years of hard-fought litigation, shows our commitment to ensuring that healthcare businesses do not take advantage of the federal health insurance programs which serve those who need assistance most.”

The settlement is the result of two lawsuits filed under the False Claims Act, by Lauren Kieff and William St. John LaCorte. They will split just under $98.1 million in compensation for initiating the action and bringing the fraud to the government’s attention.

Under federal law, whistleblowers who expose the fraud against the U.S. government by revealing information not publicly accessible are entitled to a portion of the money recovered. Whistleblowers must be the first to bring the case to the government’s attention and not publicize the lawsuit until the Department of Justice decides whether to join the prosecution of the case.

States will also receive $371.4 million as part of the settlement, with the remainder going to the federal government.

Protonix Kidney Risks

The Protonix settlement comes as Pfizer and manufacturers of other similar drugs, known as proton pump inhibitors, face potential litigation over failure to adequately warn about the kidney risks linked to the acid reflux drugs.

In addition to Protonix, proton pump inhibitors (PPI) include some of the most widely used brand name medications in the United States, including Prilosec, Nexium, Prevacid, Dexilant, AcipHex and others. The drugs work by reducing the amount of acid in the stomach and are widely used by millions of Americans, since they are thought to carry few serious side effects.

The FDA required a number of warning label changes for Protonix and other PPIs in December 2014, adding information for the first time about the risk of acute interstitial nephritis seen among users of the heartburn drugs. This condition involves inflammation that can lead to kidney injury or kidney failure if not promptly treated.

In April 2015, a study published in the medical journal CMAJ Open found that in addition to acute interstitial nephritis, side effects of Protonix and other similar drugs may also increase risk of acute kidney injury, which involves an abrupt loss of kidney function.

That research was followed by a study published earlier this year in the medical journal JAMA Internal Medicine, which found an increased risk of chronic kidney disease with use of proton pump inhibitors. That study suggested that users of Protonix, Nexium, Prilosec and other heartburn drugs may face a 50% higher kidney disease risk when compared to non-users.

Earlier this month, yet another study published in the Journal of the American Society of Nephrology, found an increased risk of kidney failure and chronic kidney disease associated with long-term use of Protonix and other PPIs.

Potential Protonix lawsuits, Nexium lawsuits, Prilosec lawsuits and other claims over side effects of similar heartburn drugs are being pursued by lawyers on behalf of individuals diagnosed with acute interstitial nephritis, acute kidney injury, chronic kidney disease or end-stage renal failure. The claims seek compensation from the drug manufacturers for failure to adequately warn about the potential risks associated with use of the drugs.