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Bristol-Myers Squibb Pays $75 Million to settle False Claims Act case on underpayment of drug rebates owed through medicaid

Bristol-Myers Squibb (“BMS”) will pay the United States and participating states $75 Million, plus interest, to settle a case alleging it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program. Of that amount, BMS will pay approximately $41 million, plus interest, to the United States, and the remainder to states participating in the settlement.

Pursuant to the Medicaid Drug Rebate Program (“MDRP”), drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs. Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug. This settlement resolves allegations that BMS underreported AMPs for a number of its drugs by improperly reducing the reported AMPs for service fees paid to wholesalers, and by improperly excluding from the reported AMPs additional value it received pursuant to price appreciation provisions in its contracts with wholesalers. As a result, 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.

This settlement resolves a lawsuit filed by Ronald J. Streck under the whistleblower provisions of the False Claims Act, which permit private parties, called relators, to file suit on behalf of the United States for false claims and to share in a portion of the government’s recovery. The civil lawsuit was filed in the Eastern District of Pennsylvania and is captioned United States ex rel. Streck v. Bristol-Myers Squibb Co., Civil Action No. 2:13-CV-7547 (E.D. Pa.).

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