Pharma giant Pfizer has reached an agreement with the U.S. government to pay $785 million to resolve whistleblower allegations that Pfizer’s Wyeth unit overcharged Medicaid in transactions involving the heartburn medication Protonix.

The two whistleblowers who reported the initial claims are entitled to share $59 million for their actions in bringing the fraud to light.

Kieff and LaCorte Expose “Best-Price” Violations

Former AstraZeneca sales rep, Lauren Kieff, and Louisiana physician, Dr. William LaCorte, discovered Wyeth’s fraudulent pricing through observing procedures at a New Orleans hospital and speaking with hospital pharmacists. The two whistleblowers filed qui tam lawsuits against Wyeth under the False Claims Act in 2009, and Pfizer subsequently inherited the case with its purchase of Wyeth that same year. The U.S. Department of Justice opted to intervene and actively participate in the litigation.Allegations suggest that Wyeth provided Protonix discounts to several of its consumers while simultaneously charging Medicaid full price — thereby violating the “best price” requirements stipulated in federal and state False Claims Acts that require pharmaceutical companies to offer their lowest cost to government funded healthcare programs.The Department of Justice estimates this behavior resulted in a loss of more than $2 billion in taxpayer dollars. The Wall Street Journal mentions a federal court trial is scheduled for March 7. This settlement is not an admission of wrongdoing by Wyeth in this case.

Government Battles Big Pharma Fraud with the False Claims Act

This is not the only time Pfizer has been in trouble. The pharmaceutical giant remains in second place, behind Merck, on the number of drug maker lawsuits. Big pharma can get in trouble for a number of reasons. Anti-kickback and False Claims Act violations, good manufacturing procedures fraud, adulterated or impure drug production, off-label drug marketing and other Food and Drug Administration (FDA) violations are among them.One of the most powerful tools the Justice Department has to battle big pharma fraud continues to be the False Claims Act, which enables individuals with inside information on illegal practices to come forward — providing substantial legal protections and a hefty cash award (between 15 and 30 percent of the total recovery) for successful government recoveries. Whistleblowers collected a total $597 million in award money last year alone, after the government recovered $2.8 billion from whistleblower lawsuits.Whistleblowers are invaluable to the government as a means of uncovering fraud, promoting corporate integrity and recovering stolen taxpayer dollars. The cash whistleblower award isn’t Dr. LaCorte’s first. Reporting a number of similar pharma fraud allegations earned the physician previous whistleblower rewards totaling $38 million.

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