Attorney General's News Release

July 15, 2008

Nixon says Missouri will receive $11 million in settlement with Bristol-Myers Squibb to resolve Medicaid fraud claims

Jefferson City, Mo. - Missouri will receive more than $11 million from a $403 million nationwide Medicaid fraud settlement with pharmaceutical giant Bristol-Myers Squibb (BMS), Attorney General Jay Nixon said today. The agreement resolves claims by Nixon, Attorneys General of 43 other states, the U.S. Department of Justice and the U.S. Attorney's Office for the District of Massachusetts that BMS engaged in several practices that resulted in Medicaid programs paying too much for prescription drugs in some cases, and being underpaid for rebates by BMS in other cases.

Missouri's portion of the settlement will be $11,075,941, plus interest since Jan. 1, 2007. Since 2000, Nixon's office has recovered more than $115 million for taxpayers in Medicaid fraud cases.

"Working with our federal partners and with the Attorneys General of other states has enabled us to ensure that the taxpayers of Missouri are not shortchanged by fraudulent practices," Nixon said. "This case was a prime example of stopping fraud and abuse against Medicaid and taxpayers."

The allegations against BMS fell into four categories:

Average wholesale price marketing manipulation - Both BMS and Apothecon (a generic division of BMS that it no longer owns) engaged in the practice of reporting pricing information to price reporting services that was substantially higher than the prices at which they actually sold their drugs. Most Medicaid programs use this "average wholesale price" from those services to set reimbursement rates. As a result, the state Medicaid programs paid inflated prices for many drugs from BMS and Apothecon.

Kickbacks - Both BMS and Apothecon allegedly engaged in kickbacks to increase their market shares. The settlement resolves claims that Apothecon paid kickbacks to pharmacies and wholesalers to induce them to carry their generic products, as opposed to its competitors', and that BMS paid physicians to attend conferences at luxury resorts and provided them with expensive meals and tickets to sporting events, where they heard presentations for BMS products.

Off-label marketing - BMS promoted its atypical antipsychotic drug Abilify for pediatric use and to treat dementia-related psychosis, when neither use had been approved by the Food and Drug Administration. BMS directed its sales representatives to market Abilify to pediatric psychiatrists and to nursing homes and long-term care facilities for those non-approved uses. As a result, off-label usage of the drug for those uses almost doubled between 2002 and 2005 as a percentage of Abilify sales.

Rebate underpayment - BMS allegedly engaged in a "lick and stick" scheme with its antidepressant drug Serzone, by placing the labels of another company, Kaiser Permanente, on Serzone that it shipped to Kaiser. The product was shipped to Kaiser at a price lower than Serzone was sold to any other customer, but this lower price was not included in the BMS calculation of "best price" under the federal Medicaid drug rebate statute. As a result, BMS underpaid its rebates to the states' Medicaid programs.

In addition, BMS has entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General, to ensure its compliance in the future.

The Missouri case was brought by the Attorney General's Medicaid Fraud Control Unit, which Nixon established in 1994. The unit has authority under state law to investigate and prosecute, both civilly and criminally, allegations of fraud against Missouri=s Medicaid program.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

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