The US Government and 16 states have joined in two whistleblower lawsuits against Wyeth which claim that the drugmaker which is being acquired of overcharging Medicaid for the antiulcerant Protonix.

The US Department of Justice alleges that between 2000 and 2006, Wyeth set up a “bundled” arrangement offering steep discounts to thousands of hospitals on the intravenous and oral versions of Protonix (pantoprazole). Hospitals that placed both products on their formularies and attained certain market share requirements were entitled to up to a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV.

However Wyeth has been accused of not passing on the lower prices to the state Medicaid programmes, and therefore “avoided paying hundreds of millions of dollars” in quarterly rebates. Tony West, the DoJ's assistant attorney general for the civil division, commented that "by offering massive discounts to hospitals, but then hiding that information from the Medicaid programme, we believe Wyeth caused Medicaid programmes throughout the country to pay much more for these drugs than they should have."

The government is seeking to recover monetary damages that are three times the amount of the alleged fraud, as well as civil penalties.

Doug Petkus, a spokesman for Wyeth, issued a statement saying that the company believes that “its pricing calculations were correct and intends to defend itself vigorously in these actions”.