Pfizer subsidiary Wyeth has agreed to pay $784.6m to settle allegations related to the calculation of Medicaid rebates for its gastric drug Protonix (pantoprazole sodium) between 2001 and 2006.

Medicaid is a social health care programme to pay for the health care of families and individuals with low income and limited resources.

The US Justice Department filed a lawsuit claiming that Wyeth's practices relating to the calculation of Medicaid rebates for Protonix violated the Federal Civil False Claims Act and other laws.

The complaint submitted by a coalition of 15 US states in the Federal District Court for the District of Massachusetts in 2009, stated that Wyeth failed to provide to state Medicaid programmes the same rebates for Protonix that it was providing to certain private customers, Reuters reported.

The agreement in principle does not include an admission of liability by Wyeth. The resolution is subject to the negotiation of final settlement agreements and court approval, Pfizer said.

Pfizer executive vice-president and general counsel Doug Lankler said: "We are pleased to have reached an agreement in principle to resolve these cases, which involve historic conduct that occurred at least ten years ago, before Pfizer acquired Wyeth.

"The resolution of these cases reflects a desire by the company to put these cases behind us and to focus on the needs of patients."

As a result of the settlement, Pfizer is reissuing its fourth quarter and full year financial results to reflect the $784.6m charge.