Bristol-Myers Squibb to Pay $75 Million to Settle False Claims Act Case Litigated by Faruqi & Faruqi on Behalf of Industry Whistleblower

On April 1, the Department of Justice announced that pharmaceutical manufacturer Bristol-Myers Squibb (“BMS”) would pay $75 million “to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program.”  This settlement concludes a False Claims Act case first brought by whistleblower Ronald J. Streck in 2008, and prosecuted to settlement by private counsel, including Peter R. Kohn and Timothy J. Peter of Faruqi & Faruqi, LLP.  

Mr. Streck, a lawyer and pharmacist, described a scheme by which BMS and other drug manufacturers fraudulently manipulated reported prices, in order to underpay Medicaid rebates owed to the federal government and various States, from 2007 to 2016.   Under Medicaid rules, drug manufacturers pay rebates to the government based on average prices in the private market after discounts. Streck said BMS and other manufacturers intentionally lowered those reported prices, and mischaracterized fees paid to wholesalers as “discounts,” in order to minimize what they owed Medicaid.

The settlement with BMS follows a $55 million settlement with pharmaceutical manufacturers AstraZeneca Pharmaceuticals LP, Cephalon, Inc., and Biogen, Inc., arising from similar allegations by Mr. Streck, who has worked in the pharmaceutical industry for more than 40 years in various capacities, including sales, regulatory affairs and association management.  Mr. Streck's suits were the first of its kind, in that the alleged fraud scheme had never been revealed in any prior lawsuit or government enforcement operation.

Announcing this most recent settlement, the Department of Justice thanked Mr. Streck and his counsel for their efforts “which were critical to the favorable resolution of this case.”