Attorney General Joseph Foster announced today that New Hampshire reached an agreement in principle to settle allegations against Wyeth, a wholly owned subsidiary of Pfizer, Inc. The settlement will resolve allegations that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales of Protonix Oral and Protonix IV between 2001 and 2006. Under the settlement Wyeth agreed to pay $784.6 million to the United States and the States. Over $371 million of this amount will go to the Medicaid Program. New Hampshire will receive $644,307.10 under the settlement.

Wyeth, Inc. was a Delaware corporation with its headquarters in Madison, New Jersey. Pfizer, Inc. is a Delaware corporation headquartered in New York, New York. Pfizer acquired Wyeth, Inc., in 2009, after the conduct alleged in the lawsuits. Wyeth distributed, marketed and/or sold pharmaceutical products Protonix Oral and Protonix IV, a class of drugs called Proton Pump Inhibitors which inhibit the production of gastric acid.

The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 as a cost containment measure for Medicaid's payment for outpatient drugs. The Medicaid Drug Rebate 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 was determined from each pharmaceutical manufacturer's reported "Best Price," or the lowest price for which it sold a covered drug in a particular quarter.

In their court filings, the government plaintiffs alleged that between 2001 and 2006, Wyeth sold Protonix Oral tablets and Protonix IV to hospitals at discounted prices. The government plaintiffs alleged Wyeth falsely reported its Best Prices for Protonix Oral tablets and Protonix IV thereby causing the Unit Rebate Amount for Protonix Oral tablets and Protonix IV and in turn, the quarterly rebate to paid to the State for each drug to be understated.

Because the Medicaid program is jointly funded by the federal and State governments, Pfizer will pay in excess of $413 million of the $784.6 million to the United States.