Indiana Medicaid has recovered $1.8 million as part of a $75 million national civil settlement resolving allegations that Bristol-Myers Squibb Co. overcharged state Medicaid programs for drugs. Of the $1.8 million, nearly $747,000 goes directly to the state, and the remainder goes to the U.S. federal government. The Medicaid program is administered jointly by the federal government and the individual states.
Bristol-Myers Squibb, a New York-based pharmaceutical manufacturer, settled with the states and the federal government following an investigation arising from a whistleblower action filed in the U.S. District Court for the Eastern District of Pennsylvania under the federal False Claims Act and various state false claims statutes.
Specifically, these settlements resolve allegations that Bristol-Myers Squibb misreported sales figures and underpaid drug rebates owed to the states. Under a federal law known as the Medicaid Drug Rebate Program, drug manufacturers must periodically return a portion of the amount paid by state Medicaid programs for the manufacturers’ drugs. The rebate program is designed to ensure that states pay competitive prices for drugs, and the rebates for a manufacturer’s drugs are calculated based on a percentage of the average prices drug wholesalers pay for each of the drugs. Each manufacturer periodically calculates and reports this average price to the federal government. The greater the average price reported by the manufacturer, the greater the rebate the manufacturer must pay for that drug.
The whistleblower’s complaint alleged that Bristol-Myers Squibb improperly treated certain fees paid to wholesalers as “discounts” and improperly failed to include certain “price appreciation” amounts it received from wholesalers in its average price calculations. The effect of these accounting practices, the whistleblower alleged, was to falsely decrease the average price the companies reported to the federal government and improperly decrease the rebates paid to the states. The claims resolved by the settlement are allegations only; there has been no determination of liability