Bristol-Myers Squibb to pay state $7M to settle Medicaid overcharging complaint

Bristol-Myers Squibb has agreed to pay Washington state nearly $7 million to settle allegations of illegal marketing and pricing of prescription medications.

Forty-three states, including Washington, and the federal government are involved in the $389 million settlement that compensates state Medicaid programs, which were overcharged for prescription medications.

According to the state Attorney General's Office, the settlement stems from allegations that Bristol-Myers, and its former subsidiary, Apothecon, engaged in several improper marketing and pricing practices, including:

• Reporting inflated prices for prescription drugs knowing that Medicaid and other federal health-care programs would use these prices to pay for Bristol-Myers products.

• Paying illegal fees to physicians and other health-care providers and pharmacies to induce the purchase of Bristol-Myers products.

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

• Misreporting the sale price for the antidepressant Serzone, resulting in the improper reduction of rebates paid to state Medicaid programs.

In all, said Dawn Cortez, state Medicaid Fraud Control Unit director, the case involved 53 drugs, some sold by Bristol-Myers and some by Apothecon. The charges involved wholesale pricing allegations and kickbacks. Cortez said drug companies often provided physicians with benefits such as trips to Hawaii to encourage them to prescribe their drugs, but these weren't reported as required by law.

The settlement will go to the state's Medicaid fund, while the penalty assessed goes to the state general fund. Patients won't get money back because they didn't pay for the drugs.

Cortez said the first claim was filed in 1991 and the marketing and pricing problems continued until 2005.

The settlement was the second major one with Bristol-Myers Squibb in the past five years.

In 2003, the state was part of a $55 million national settlement reached in a lawsuit against Bristol-Myers. It compensated Washington cancer patients who had paid too much for chemotherapy drugs.

The antitrust suit alleged the drug manufacturer fraudulently obtained patents on the cancer drug Taxol that delayed the availability of lower-priced generic versions. As a result, thousands of cancer patients, including as many as 3,000 in Washington, were overcharged.

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com