News

Bristol Myers Squibb Company Pays $75 Million Over Allegations of Medicaid Fraud

U.S. Department of Justice Announces Settlement Today

New York, NY, April 1, 2021 — Today, more than seven years after whistleblower Ronald J. Streck, a former executive of a network of regional drug wholesalers, filed a lawsuit alleging that Bristol Myers Squibb (BMS) defrauded Medicaid programs coast to coast for many years, BMS agreed to pay $75 million to settle the claims with the United States and the state Medicaid programs. Dan Miller of Walden Macht & Haran was lead trial counsel representing Mr. Streck.

View the executed settlement here.

This settlement is the latest and largest in a series of cases filed by Mr. Streck, and represented by Walden Macht & Haran partner Dan Miller, relating to pharmaceutical manufacturers who allegedly defrauded the Medicaid program through price manipulation.  Links to previous settlements can be found here.

In today’s announcement by the United States Department of Justice, Deputy United States Attorney Louis D. Lappen acknowledged the efforts of Mr. Streck and his counsel, Dan Miller, Chair of Walden Macht & Haran’s Whistleblower Practice Group, stating, “We thank Mr. Streck and his counsel for their efforts, which were critical to the favorable resolution of this case.”

Miller commented on the changing landscape of False Claims Act litigation, stating, “Years ago, if the government declined a False Claims Act case brought by a whistleblower, the case would typically be dismissed. But more recently, complex commercial litigation law firms like Walden Macht & Haran have successfully litigated declined cases against many of the nation’s largest companies. In this particular case, the results for the taxpayers speak for themselves: we took this case to the brink of trial and prevailed.”

Mr. Streck brought suit in 2013 under the Federal False Claims Act and various state false claims acts. The lawsuit alleged that from 2007 to 2013, BMS treated millions of dollars in payments to drug distributors as “discounts,” when in fact the payments were for bona fide distribution services. By treating the payments as discounts, BMS reported lower average manufacturer prices, which led to BMS paying less in drug rebates to state Medicaid programs.

The lawsuit further alleged that beginning in 2014, BMS began to properly treat the service fees it paid to drug distributors as bona fide service fees, but at the same time, BMS began a new scheme to improperly reduce its Medicaid rebate payments and defraud the government. Specifically, the suit alleged that when BMS raised prices on its drugs, it clawed back the value of those price increases for any drugs in the drug distributors’ inventory through contract provisions, but failed to include this clawback revenue in its pricing submissions to the government, leading to millions of dollars in additional government losses.

In 2017, the government declined to intervene and Mr. Streck and his counsel proceeded to litigation. The case finally settled shortly before trial was set to begin, I announced it today.

Despite the settlement, Mr. Streck’s pursuit of alleged fraud continues in federal court in Chicago, where Mr. Streck is pursuing Eli Lilly and Company for the same clawback scheme allegedly perpetrated by BMS.

Today’s settlement announcement with BMS marks the tenth previously-declined False Claims Act case that Walden Macht & Haran partner Miller has settled on behalf of the federal and state governments.

The case is captioned U.S. ex rel. Ronald Streck et al. v. Bristol-Myers Squibb Company, C.A. No. 13-7547.

 

Contact: Julia Pacetti, julia@jmpverdant.com, (917) 584-7846