(LEGAFI) -- The government has decided to join a whistleblower lawsuit brought by a Chicago pharmacist who accuses three generic drugmakers of scheming to overcharge the Medicaid program by getting pharmacies to dispense different, more-expensive, medicines than what was prescribed.

Chicago pharmacist Bernard Lisitza alleges in the whistleblower lawsuit that Par Pharmaceuticals Companies, Inc. of New Jersey and two foreign generic drugmakers overcharged the Medicaid program by getting pharmacies to illegally switch from generic versions of Prozac and Zantac to Par’s more expensive products so it could charge Medicaid more.

The other defendants in the Par Pharmaceuticals lawsuit are sister companies Alphapharm PTY Ltd. of Australia and Canada's Genpharm ULC, which are both accused of helping to run the scheme and manufacture or procure the medicines.

The U.S. Attorney’s office joined the whistleblower lawsuit this month, which was originally filed in November 2006 in U.S. District Court in the Northern District of Illinois. It remained under seal until earlier this month while federal prosecutors reviewed Lisitza's evidence, investigated and decided whether to join in the suit.

Lisitza alleges in the Par Pharmaceuticals whistleblower lawsuit that the scheme centered on the fact that the Medicaid program had a price cap for what could be charged for capsules – but not tablets – of generic anti-anxiety drug Prozac, or fluoxetine. Likewise, Medicaid had a cap on the price for tablets, but not capsules, of generic heartburn medicine Zantac, or ranitidine.

Lisitza says Par and the other companies got pharmacies, including Walgreen Co., to substitute the form without a price cap, allowing them to charge two to five times the price for the capped dosage form. That gave the pharmacies a much higher Medicaid reimbursement, while Par, Alphapharm and Genpharm cornered the market for their generic versions of Prozac and Zantac.

"What happened was, a prescription would come in for the capped dosage form of the drug, and a prescription would be filled for the non-capped dosage form," an attorney for Lisitza said, adding that there were no generic Prozac tablets on the market until Par, Genpharm and Alphapharm began their scheme. "They created them and they created a market for them. They made a fortune."

Walgreen Co. is not a defendant in the whistleblower lawsuit, but paid the government and 42 states $35 million in June 2008 to settle allegations it defrauded Medicaid by illegally switching dosage forms. Walgreen denied any wrongdoing.

The Par Pharmaceuticals whistleblower lawsuit is seeking damages triple the amount the federal government was overcharged in the alleged Medicaid scam, plus the maximum damages allowed in states whose Medicaid programs were allegedly defrauded. Lisitza’s attorney said damages and penalties could exceed $300 million.

Under federal and state False Claims Acts, private citizens aware that a company is defrauding the government can sue the company on the government's behalf to help the government recover money illegally gained. Whistleblowers are entitled to 15 percent to 30 percent of what the government recovers, if it joins the case.