The United States justice department on Wednesday asked the drug major, Pfizer, to pay $784.6 million to the U.S government in a case where Pfizer's subsidiary, Wyeth, was found involved in false and fraudulent claims on its two anti-acid drugs.

Wyeth, which was acquired by Pfizer in 2009, was charged with underpaying drug rebates (overcharging) to the U.S government under Medicaid, the federal health insurance programme, Reuters reported.

The Medicaid Programme requires the drug companies to report to the government the best (discounted) prices they offer to customers. The drug companies have to pay the rebates to the state Medicaid programmes so that the government receives the same discounts that drug companies offer to its customers, according to Money Control.

"The settlement resolves claims by the U.S. and states that Wyeth knowingly reported false and fraudulent prices on two of its anti-acid drugs, Protonix Oral and Protonix IV," the justice department said.

The U.S government, in its complaint to the justice department, alleged that Wyeth proposed to offer discounts to hospitals on bundles that included both anti-acid drugs, when made available to the staff and patients. The justice department accused Wyeth of offering incentives to hospitals if they prescribed its anti-acid Protonix Oral, which the drug firm hid from the government while seeking insurance claims under Medicaid.

The misconduct of Wyeth during 2001-2006 came to the fore after Lauren Kieff, a whistle-blower and a former hospital sales representative for another drug company, and William St. John LaCorte, a New Orleans-based doctor, filed a False Claims Act lawsuit. The two will now share a $98 million cut of the settlement, the justice department said.

"We are pleased to have finalized the agreement to resolve these cases, which involve historic conduct that occurred at least 10 years ago, before we acquired Wyeth," said Doug Lankler, Pfizer executive vice president and general counsel, in a statement, according to Reuters.

Under the terms of the settlement, Wyeth has been asked to pay $413.2 million to the federal government and $371.4 million to state Medicaid programmes.