Bristol-Myers Squibb must face whistleblower suit claiming underpaid Medicaid rebates

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A federal judge ruled that Bristol-Myers Squibb must face a whistleblower False Claims Act lawsuit. (Pixabay)

Years after a former pharmacist sued Bristol-Myers Squibb and other companies for allegedly underpaying Medicaid rebates, a federal court rejected Bristol's attempt to escape the case.

Pharmacist and lawyer Ronald Streck filed a False Claims Act whistleblower lawsuit against Bristol-Myers and other companies back in 2013, but later withdrew his claims against the other defendants. Now, his lawsuit alleges that BMS fraudulently manipulated its average manufacturer prices to underpay Medicaid rebates from 2007 to 2016.  

Under Medicaid rules, drugmakers pay rebates to the government based on average prices in the private market after discounts. Streck said BMS intentionally lowered those reported prices to minimize what it owed Medicaid. 

In its move to dismiss the case, BMS argued that Streck failed to show it had violated any regulatory requirement or prove it intended to deceive the government. But Pennsylvania federal judge Timothy Savage ruled last week that Streck "has alleged sufficient facts to state a false claims cause of action."

“He alleges facts which, if proven, will establish that BMS knowingly or, at least, recklessly reported and paid lower rebates than it owed,” federal judge Timothy Savage wrote in the opinion. 

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A BMS representative declined to comment on the development.

RELATED: AstraZeneca and Cephalon pony up $50M+ to settle Medicaid pricing claims 

It isn’t the first time Streck took similar claims to court. He previously sued AstraZeneca, Teva’s Cephalon and Biogen Idec for underpaying Medicaid rebates, and those companies ended up paying more than $50 million to settle in 2015. AZ paid the biggest share of the settlement at $46.5 million, compared with Cephalon’s $7.5 million and Biogen Idec’s $1.5 million. 

Previously, Streck’s law firm said the whistleblower learned of the alleged fraud while working in the pharma distribution industry in the mid-2000's.