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Attorney General announces settlement with Bristol-Myers Squibb

(Pablo Martinez Monsivais | AP)
Published: Sep. 14, 2021 at 5:20 PM CDT
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PIERRE, S.D. (KOTA) - On Tuesday, Attorney General Jason Ravnsborg announced that South Dakota and other states including California, Florida, New York, North Carolina, and Texas, have reached an agreement with the pharmaceutical company Bristol-Myers Squibb Company. This is a settlement over allegations that Bristol-Myers Squibb overcharged the state Medicaid programs for drugs.

The investigation resulted from a qui tam action filed in the United States District Court for the Eastern District of Pennsylvania under the federal False Claims Act and various state false claims statutes.

The settlement resolves allegations that the New York based Bristol-Myers Squibb underpaid drug rebates that were 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 their drugs.

The rebate program is designed to ensure that states pay competitive prices for drugs. The rebates are calculated based on a percentage of the average price 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 (AMP).

The 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 AMP calculations. The effect of these accounting practices was to falsely decrease the AMP 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.

Bristol-Myers Squibb has paid the states and the federal government $75 million to resolve allegations against the company. The total portion of the settlement amount recovered by South Dakota is $138,047.13, of which $83,386.99 will be retained by the federal government as the federal Medicaid share. The remaining $54,660.14 will go to the state general fund to offset alleged Medicaid damages in this case.

A National Association of Medicaid Fraud Control Units (NAMFCU) Team participated in the investigation and conducted the settlement negotiations with Bristol-Myers Squibb on behalf of the states. The South Dakota Medicaid Fraud Control Unit and the South Dakota Department of Social Services assisted in recovering the settlement money. The South Dakota Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $426,181 for Federal Fiscal year FY 2021. The remaining 25 percent, totaling $142,060 for FY 2021, is funded by South Dakota.

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