Bristol-Myers Squibb (BMS) recently came to an agreement with the United States and participating states to pay $75 million plus interest to resolve False Claims Act allegations. According to the government, BMS knowingly underpaid rebates owed under the Medicaid Drug Rebate Program (MDRP). Of the $75 million, $41 million will be paid to the United States and the remaining $34 million will be paid to states participating in the settlement.
Under the MDRP, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid coverage of their drugs. The rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drug. This means that generally speaking, the higher the reported AMP, the greater the rebate paid by the manufacturer to state Medicaid programs.
From 2007 to 2013, BMS allegedly underreported AMPs for multiple drugs by improperly reducing the reported AMPs for service fees paid to wholesalers and from 2014 to 2016, improperly excluded additional value received pursuant to price appreciation provisions in contracts with wholesalers, which also lowered the AMP amount. By taking those actions, BMS allegedly underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.
The case was brought by a former head of a health care industry trade group, under the whistleblower provisions of the False Claims Act. The whistleblower filed the lawsuit against BMS in 2013, along with similar suits against other drug makers. The government declined to intervene in this case.
Dan Miller of Walden Macht & Haran, the lawyer for the whistleblower, said that the case was part of a trend in recent years of commercial litigation firms successfully litigating cases brought under the federal False Claims Act without government intervention. “In this particular case, the results for the taxpayers speak for themselves: we took this case to the brink of trial and prevailed,” he said.
BMS did not admit any wrongdoing as part of the settlement and in a statement, 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.”
“The Department of Justice is committed to ensuring that pharmaceutical manufacturers comply with the requirements of programs such as the Medicaid Drug Rebate Program,” said Deputy United States Attorney Louis D. Lappen. “It is critical that these companies report accurate pricing information used in the rebate calculations so that the government and taxpayers benefit from the program as Congress intended.”