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Bristol-Myers Squibb Settles Drug Rebate False Claims Act Case for $75 Million

April 22, 2021

In April, the United States Attorney for the Eastern District of Pennsylvania announced that Bristol-Myers Squibb will pay $75 million to resolve False Claims Act allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program.  The government did not intervene and take over the lawsuit. Therefore, the government will pay between 25% and 30% of the settlement to the whistleblower.

Bristol-Myers Squibb Misreported its Average Manufacturer Price

We have a full article explaining the Medicaid Drug Rebate Program. Briefly, the program requires manufacturers to pay quarterly rebates to state Medicaid programs. These payments ensure that states don’t pay more for drugs than private insurers. The program is complicated. It is also vulnerable to several types of fraud.  Bristol Myers Squibb’s Drug Rebate Program fraud involved fraudulently reducing its reported Average Manufacturer Price (AMP).

Medicaid Rebate Program Flowchart

The rebate payments are based, in part, on the AMP that the manufacturers report to the government. Generally, higher reported AMPs result in larger rebates to state Medicaid. According to the government, Bristol-Myers Squibb underreported AMPs for a number of its drugs. It did this by reducing the reported AMPs for service fees paid to wholesalers. It also excluding from the reported AMPs price appreciation provisions. 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.

The Whistleblower Will Receive Between 25% and 30% of the $75 Million Dollar Settlement

The lawsuit was first filed by Ronald J. Streck under the whistleblower provisions of the False Claims Act. Mr. Streck was an executive with more than 30 years of experience in the pharmaceutical industry.  This provision, also called a qui tam provision allows private parties, called relators, to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The government declined intervention in this matter and the relator and his counsel proceeded with the case against Bristol-Myers Squibb.

When the government declines to intervene, the False Claims Act entitles the relator to receive between 25% and 30% of the settlement or judgment. 31 U.S. Code § 3730(d)(2).  That law will entitle Mr. Streck to receive between $18.75 and $22.5 million of the settlement.

How to Report Medicaid Drug Rebate Fraud

The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government. If the case is successful, the relator is entitled to a share of the government’s recovery.  Among the firm’s many successes are cases involving Medicaid Drug Rebate Fraud.  These include the government’s $465 million settlement with Mylan for failing to pay the correct Medicaid rebates on its highpriced drug EpiPen. And the The United States and numerous states intervening in a case our firm filed alleging that Mallinckrodt improperly used an improper base AMP for its high-priced drug Acthar.

For more information, contact the Whistleblower Law Collaborative LLC at 617.366.2800.  

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