LOS ANGELES (CN) – Bristol Myers-Squibb will pay California $23 million as part of its $515 million nationwide settlement, for abusing Medicaid’s honor system by inflating drug costs, paying kickbacks, and pushing potentially dangerous adult medications for children, Attorney General Jerry Brown said.
“California found evidence of violations including reporting artificially high average wholesale prices for prescription drugs to shut out competitors, organizing kickback schemes to lure pharmacies and wholesalers, illegally marketing an adult anti-psychotic drug as a treatment for children, and hiding the lowest sale price for Serzone to underpay Medicaid,” Brown said in a statement.
The California payment includes almost $12 million in Medi-Cal restitution and $12 million for California’s False Claims Fund. Similar investigations have ended recently with five other pharmaceutical companies paying California a total of $9.7 million. The state has claims pending against 15 other companies.
Whistleblowers sued Bristol Meyers-Squibb around the country, prompting federal and state investigators investigate the company and its former subsidiary Apothecon in 2001. Brown said Bristol Meyers cooperated with the investigation by volunteering information about possible anti-kickback law violations.
The company used several illegal strategies to increase its profits. It boosted sales from 2002 to 2005 by promoting the adult schizophrenia drug Abilify to children, under a different label, though the FDA had not approved Abilify for children.
It set its wholesale drug prices higher than its sale prices to lock out generic drug companies, then raked in extra payments from Medicaid, which are based on company-reported drug costs.
It paid millions of dollars to pharmacies and wholesalers who switched from competitors’ products to Bristol Meyers’ drugs.
It organized “consulting programs” for doctors, “consisting of trips to luxury resorts, meals at expensive restaurants, and tickets to sports events where doctors allegedly listened to pharmaceutical sales pitches,” Brown said.
And it slapped Kaiser labels on bottles of Serzone to give Kaiser a lower price on the drug than Bristol-Myers offered any other company, and it left that sweetheart price out of estimates it sent to the federal government for Medicaid reimbursements.