Last month, Bristol Myers Squibb (BMS) reached an agreement with the United States and participating states to pay 75 million dollars plus interest in order to resolve False Claims Act allegations. The government contends that BMS underpaid the rebates owed under the Medicaid Drug Rebate Program (MDRP). Of the 75 million dollar payout, 41 million dollars will be paid to the United States and 34 million dollars will be paid to states involved in the settlement.
The MDRP makes it mandatory for drug manufacturers to pay quarterly rebates to state Medicaid programs in exchange for Medicaid coverage of their medications. The rebates are determined using the Average Manufacturer Prices (AMPs), which are reported to the government by the manufacturers. In general, the higher the AMP, the greater the rebate paid by the manufacturer to the Medicaid programs.
Between 2007 and 2013, BMS underreported the AMPs for various drugs by reducing the AMPs for service fees paid to wholesalers. Additionally, from 2014 to 2016, the company excluded additional value received based on price appreciation in contracts with wholesalers, also lowering the AMP. Thus, BMS underpaid quarterly rebates owed to participating states for nearly a decade, causing the United States to be overcharged for its payments to each state’s Medicaid program.
The case was presented under the whistleblower provisions of the False Claims Act. The whistleblower, a former head of healthcare industry trade group, first filed the lawsuit in 2013, but the government declined to intervene. Dan Miller of Walden Macht & Maran represented the whistleblower and believes the results speak for themselves: “We took this case to the brink of trial and prevailed.”
BMS, however, did not admit any guilt despite the settlement. A company spokesperson said, “Bristol Myers Squibb acted responsibly and in good faith in interpreting these regulations, and we deny that any wrongdoing occurred in this matter.”
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Tracy Everhart
Tracy Everhart is the Editor for Drug Law Journal. A highly-trained and certified medical professional, Tracy is also an accomplished medical writer. After spending years on the front lines of the medical profession, Tracy now devotes her expertise and skills to researching and reporting on new drugs and devices that enter the market, as well as their side-effects and the real-life stories involved. Prior to joining Drug Law Journal, Tracy wrote for benchmark online healthcare resources focused on families and, in particular, women’s health issues. Tracy holds post-graduate degrees from both the American College of Healthcare Sciences and the Yale School of Nursing. She is also a graduate of both Hampshire College, where she studied microbiology and the University of South Carolina school of nursing.