Attorney General Andrew Cuomo Announces $40 Million Settlement With Bristol-myers Squibb To Resolve Medicaid Pharmaceutical Pricing And Marketing Fraud In New York State

New York, N.Y. (July 15, 2008) - New York State Attorney General Andrew Cuomo announced today that his Medicaid Fraud Control Unit participated in a team from the National Association of Medicaid Fraud Control Units involved in the investigation of the alleged fraudulent conduct and that represented the interests of 43 states and the District of Columbia in reaching the $389 million national settlement, including the federal government, with Bristol-Myers Squibb Company (BMS) and its former wholly owned subsidiary Apothecon, Inc. The allegations against the company involve illegal drug marketing and fraudulent pricing of prescription medications paid by the participating states’ Medicaid programs. The State of New York will receive $40 million of the settlement amount.

“My office will not stand idly by while big pharmaceutical companies cheat hardworking New Yorkers out of millions of dollars and engage in fraud,” said New York State Attorney General Cuomo. “The conduct alleged against this company involves misrepresenting the prices of its drugs to increase profits, paying kickbacks to doctors and other health care providers to induce them to purchase the company’s drugs, and promoting the sale of a drug for unauthorized pediatric use. We are sending a message to pharmaceutical companies that this type of conduct is unacceptable and that we will recover the costs of the conduct for New York’s citizens.”

In New York 49 counties are also participating in the settlement because they had sued BMS over allegations that BMS inflated prices for their prescription drugs. Counties currently finance, annually, over $7 billion for health care services provided through the Medicaid program. Between 1997 and 2003, counties paid more than $13 billion for prescription drugs alone, purchased through the Medicaid program.

“This is a fair and reasonable settlement that will protect the integrity of the Medicaid program by including a new prescription pricing protocol, ensuring government health care programs, like Medicaid, pay the correct price for medicine in the future,” said Stephen J. Acquario, General Counsel and Executive Director of the New York State Association of Counties. “Recovering damages for overcharges to the State’s Medicaid program for prescription drugs bought with property tax dollars on behalf of county residents is significant.”

The settlement addresses allegations that BMS engaged in a number of improper marketing and pricing practices, including:

  • Reporting inflated prices for various prescription drugs knowing that Medicaid and various federal health care programs would use these reported prices to pay for BMS and Apothecon products used by their recipients;

  • Paying illegal remuneration to physicians, health care providers, and pharmacies to induce them to purchase BMS and Apothecon products;

  • Promoting the sale and use of Abilify, an antipsychotic drug, for pediatric use and for treatment of dementia-related psychosis, uses which the federal Food and Drug Administration has not approved; and

  • Misreporting sales prices for Serzone, an antidepressant, resulting in the improper reduction of the amount of rebates paid to the state Medicaid programs.

The settlement reimburses the federal government and the participating states for excessive amounts paid by Medicaid programs as a result of this conduct. As part of the settlement, BMS has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, under which BMS will be required to report accurately its average sales prices and average manufacturers prices in the future.

A team from the National Association of Medicaid Fraud Control Units participated in the investigation and represented the states’ interests in the settlement negotiations. Team members include Unit Directors from Ohio and Vermont as well as Assistant Attorneys General from Massachusetts, New York, and New Mexico.