Kentucky to share in $75 million settlement

Published 4:54 pm Wednesday, July 14, 2021

Kentucky will share in a $75 million multi-state settlement with Bristol-Myers Squibb Company, in a federal lawsuit that alleged the company overcharged state Medicaid programs for drugs.

Under the settlement, the pharmaceutical manufacturer has agreed to pay to resolve these allegations, with the Kentucky Medicaid Program receiving $1,274,861.61 in restitution and other recovery.

Attorney General Daniel Cameron joined the U.S. Department of Justice, U.S. Attorney for the Eastern District of Pennsylvania, and a multi-state coalition of attorneys general in the settlement.

“Medicaid fraud harms Kentucky Medicaid beneficiaries and taxpayers,” Cameron said. “In this case, we partnered with the DOJ and other state Medicaid Programs to investigate allegations of fraud and to stop Bristol-Myers from defrauding Kentucky’s Medicaid Program. We are pleased that our efforts returned over $1.2 million to Kentucky’s Medicaid Program.”

This lawsuit alleged Bristol-Myers underpaid drug rebates owed to the states. Under 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. This average price, which the manufacturer reports to the federal government, is known as the Average Manufacturer’s Price or “AMP.”

The coalition’s investigation into Bristol-Myers stems from a whistleblower lawsuit filed in Pennsylvania against the New York-based pharmaceutical manufacturer. The whistleblower’s complaint alleged the company improperly treated certain fees paid to wholesalers as “discounts.”

It also claimed Bristol-Myers failed to include certain “price appreciation” amounts it received from wholesalers in its AMP calculations. These actions falsely decreased the AMP the companies reported to the federal government and improperly reduced the rebates paid to the states.

A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted the settlement negotiations with Bristol-Myers Squibb on behalf of the states.