Indiana to receive $9.2M share from Medicaid settlement

Indiana will receive $9.2 million from a New Jersey pharmaceutical maker to settle allegations that the drug company did not give the state the full rebate it owed Indiana Medicaid for prescription medications that treat stomach conditions.

The federal government and 34 other states will share in the $784.6 million settlement from Wyeth, a subsidiary of Pfizer Inc., for not charging state Medicaid programs the best price available for two proton-pump inhibitors, used to treat peptic ulcers and acid reflux disease.

It's the second largest settlement of its type in recent years, according to the Indiana attorney general’s office.

Under the federal Medicaid Prescription Drug Rebate Program, pharmaceutical companies are required to pay rebates four times a year to state Medicaid programs to ensure that states are charged the best price in the interest of conserving tax dollars.

Whistleblower suits filed in Louisiana and Massachusetts, however, alleged that Wyeth did not properly discount its drugs and paid too small rebates between 2001 and 2006.

In 2009, Pfizer., which is based in New York, acquired Wyeth.

“We are pleased to have finalized the agreement to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before we acquired Wyeth,” said Doug Lankler, Pfizer executive vice president and general counsel, in an emailed statement. “The resolution of these claims reflects our desire to put these historic cases behind us and to focus on the needs of patients.”

The settlement does not require Wyeth and Pfizer to admit legal wrongdoing, but serves to resolve the two lawsuits. The settlement, which was originally disclosed in February, was finalized earlier this week.

“Medicaid is a program funded by taxpayers’ money that covers medical care and prescription drugs for low-income Hoosiers, " said Indiana Attorney General Greg Zoeller in a statement. "When a business cheats Medicaid into paying more than should be paid for drugs, then my office will hold them accountable."

Indiana’s Medicaid Fraud Control Unit participated in the investigation and settlement.

Call IndyStar reporter Shari Rudavsky at (317) 444-6354. Follow her on Twitter:@srudavsky.