Attorney General Todd Rokita announced today that 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, $746,780 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.
“Hoosier taxpayers support the Medicaid program with faith that the funds are used to help provide the health care needs of people truly needing assistance,” Attorney General Rokita said. “Whenever any company or individual overcharges or otherwise defrauds the program, we must ensure that penalties are imposed and restitution is made.”
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.
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. Matthew Whitmire, Director of Attorney General Rokita’s Indiana Medicaid Fraud Control Unit (MFCU), is also president of NAMFCU.
The Indiana Medicaid Fraud Control Unit receives 75% of its funding from the U.S. Department of Health and Human Services under a federal grant. The remaining 25% is funded by the State of Indiana.
Across all divisions, the Office of the Attorney General has recovered more than $198 million in 2021 on behalf of Hoosiers.