Wyeth pricing questioned

The US attorney's office in Boston ordered Wyeth to reveal how it calculated prices for its heartburn treatment Protonix for state Medicaid programs.

The government subpoena, disclosed by Wyeth yesterday and issued within the last several weeks, is the latest step federal law-enforcement officials have taken to untangle pharmaceutical pricing. The US attorney in Boston, along with multiple state attorneys general, have been investigating prescription drug fraud in Medicaid and Medicare for years.

''Other pharmaceutical companies have received similar subpoenas relating to their calculations of best price from the same United States attorney," Wyeth, based in Madison, N.J., said yesterday in its annual report filed with the Securities and Exchange Commission.

The US attorney's subpoena requested quarterly Protonix price calculation documents going back to its launch in 2000, the company said. Such calculations are required by federal law to get manufacturers' ''best price" for drugs.

Wyeth sold $2.3 billion of Protonix last year, according to IMS Health, a pharmaceutical research firm. Protonix is the third-largest seller, behind Prevacid and Nexium, in a class of drugs called ''proton pump inhibitors," which reduce stomach acid.

Attention on drug prices is increasing this year with intense scrutiny on Medicaid budgets in Congress and the advent in January 2006 of the new Medicare prescription drug benefit.

The Government Accountability Office said in February that the federal government had done a poor job of monitoring whether drug companies have actually given state Medicaid programs their best prices. The GAO also found ''considerable variation" in the methods used by drug companies to calculate their best price.

Last fall, a report by the Office of Inspector General of the Department of Health and Human Services said some states paid higher prices for the same drugs than other states. For example, the highest-paying state, New Jersey, paid 477 percent more per drug on average than the lowest-paying state, Michigan, the inspector general's report found.

Federal and state investigations into pricing schemes have resulted in large settlements with drug companies. In 2003, Bayer AG paid $250 million, GlaxoSmithKline paid $90 million, and AstraZeneca PLC agreed to pay $355 million to settle various civil and criminal fraud allegations leveled by the government. In 2001, TAP Pharmaceuticals Products Inc. paid $875 million in civil and criminal penalties and admitted it conspired with doctors to bill governments for drugs that were given to doctors for free.

Christopher Rowland can be reached at crowland@globe.com.