On April 27, 2016, DOJ announced that Pfizer and its subsidiary Wyeth, LLC, agreed to pay $784.6 million to resolve allegations that Wyeth failed to disclose to federal and state healthcare programs discounts provided to hospitals for Proton Pump Inhibitors (PPIs), as required by its Medicaid Drug Rebate Agreement. DOJ alleged that this lack of disclosure led to states overpaying millions of dollars in reimbursements for PPIs.
Under Medicaid's Drug Rebate Program, drug manufacturers must enter into a Medicaid Drug Rebate Agreement with HHS for their prescription drugs to be reimbursed by Medicaid. These agreements require manufacturers to pay rebates for drugs purchased by Medicaid. The amounts of the rebates are based on the Average Manufacturer Price, or the average price paid by wholesalers, and the Best Price, or the lowest price paid by any purchaser. These prices must be reported to CMS on a quarterly basis.
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