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April 27, 2016
State Joins Joint State-Federal Settlement with Wyeth
Resolving Allegations of Underpaying Rebates
Connecticut will take part in a global $784.6 million settlement with drug-maker Wyeth to resolve allegations that the company knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales of the drug Protonix, Attorney General George Jepsen, Chief State's Attorney Kevin T. Kane and Department of Social Services (DSS) Commissioner Roderick L. Bremby announced today.
The Medicaid Drug Rebate Program was enacted by Congress in 1990 as a cost-containment measure for Medicaid's payment of prescription drugs. The program requires participating pharmaceutical manufacturers to pay quarterly rebates to state Medicaid programs for each of its drugs sold to pharmacies that were reimbursed by Medicaid. The quarterly rebate is determined from each manufacturer's reported "best price" – the lowest price for which it sold a drug in a particular quarter.
The states and federal government alleged that, between 2001 and 2006, Wyeth sold Protonix Oral tablets and Protonix IV to hospitals at discounted prices. They alleged that Wyeth's contracts with the hospitals created a bundled sale under the terms of the Medicaid Drug Rebate Agreement by linking discounts available to participating hospitals for Protonix IV to discounts on Protonix Oral tablets, but that Wyeth did not treat the sales as bundled within the meaning of the rebate program.
As a result, the states and federal government allege, the discounts were not properly allocated and the "best price" was falsely reported, which caused the rebate amounts paid to the states to be significantly lower than they should have been.
The portion of the settlement attributable to the state and federal shares of Connecticut’s Medicaid program is $10,084,721.65, of which $4,974,747.35 represents the net state share. The state's net share of the settlement will be deposited into the state's General Fund.
"Improper billing practices involving our Medicaid program will not be tolerated," said Attorney General Jepsen. "We are vigilant in working with our federal and state law enforcement partners to identify and prosecute fraudulent and abusive conduct, and we will continue to work to hold accountable those who seek to defraud and overcharge our taxpayers. I thank the Chief State's Attorney and the Department of Social Services for their continued partnership in these matters."
Chief State's Attorney Kane expressed his appreciation to the Medicaid Fraud Unit in the Office of the Chief State's Attorney, the Office of the Attorney General and the Department of Social Services for their continued collaboration to protect the integrity of the Medicaid program. "With limited resources available to help those who are truly in need, it is critical that we get the most from each tax dollar," Kane said.
DSS Commissioner Bremby said, "Rebates from pharmaceutical companies are obtained by state Medicaid programs to help offset costs to taxpayers, and are an important factor in the sustainability of this public health coverage. Connecticut's share of this settlement – nearly $5 million – is a welcome development and another reminder that protecting the integrity of the Medicaid program requires continual oversight. We thank our partners at the Attorney General's Office, the Chief State's Attorney's Office, and our federal counterparts, for their role in this and other actions benefitting the program and taxpayers."
Wyeth was acquired by Pfizer, Inc. in 2009 and is a wholly owned subsidiary of Pfizer. Protonix is the brand name for pantoprazole, a prescription drug used as a short-term treatment for gastroesophageal reflux disease.
Anyone with knowledge of suspected fraud or abuse in the healthcare system is asked to contact the Medicaid Fraud Control Unit in the Office of the Chief State’s Attorney at 860-258-5986 or by email at; the Attorney General's Antitrust and Government Program Fraud Department at 860-808-5040 or by email at; or the DSS fraud reporting hotline at 1-800-842-2155 or by email at
Assistant Attorney General Joshua Jackson assisted the Attorney General with this matter.
Media Contacts:
Office of the Attorney General:
Jaclyn M. Falkowski
860-808-5324 (office)
860-655-3903 (cell)
Office of the Chief State's Attorney:
Mark Dupuis
860-258-5997 (office)
Department of Social Services:
David Dearborn
860-424-5024 (office)
Consumer Inquiries:
Twitter: @AGJepsen