[h1]Drug firm, subsidiary settle suits for $515m[/h1]
[h2]Pricing schemes, fraud alleged[/h2]
By Jonathan Saltzman and Liz Kowalczyk, Globe Staff | September 29, 2007
Bristol-Myers Squibb and a subsidiary have agreed to pay more than $515 million to settle civil suits over fraudulent drug marketing and pricing schemes, including illegally promoting an anti-psychotic drug to children and the elderly, US Attorney Michael J. Sullivan said yesterday.
The settlement between the federal government and Bristol-Myers Squibb and Apothecon Inc. is the third-largest between a pharmaceutical company and the US Attorney's Office in Massachusetts, which has obtained more than $4 billion in healthcare fraud settlements since 2000 and acquired a national reputation for pursuing such cases.
As with many of the earlier settlements, the agreement came after several employees of the pharmaceutical giant turned whistleblowers and filed federal suits in Massachusetts, enticed in part by the track record of federal prosecutors here.
The agreement says Bristol-Myers Squibb gave kickbacks to physicians and healthcare providers from 2000 through mid-2003 to get them to prescribe the company's drugs. The kickbacks came in several forms, including consulting fees and trips to luxury resorts.
"Patients are entitled to unbiased decision-making from their physicians and should not have to worry that financial inducements or lavish entertainment have influenced their physicians' prescribing choices," Sullivan said.
From 2002 through 2005, Bristol-Myers Squibb promoted the sale of Abilify, an anti-psychotic drug, for pediatric use and to treat dementia-related psychosis, both "off-label" uses, prosecutors said. The Food and Drug Administration has approved Abilify to treat adult schizophrenia and bipolar disorder but not for the uses marketed by Bristol-Myers Squibb. The FDA has mandated that the package for Abilify carry a "black box" warning specifically concerning use for treatment of dementia-related psychosis.
Nonetheless, Bristol-Myers Squibb created a special longterm-care sales force that called on nursing homes and promoted off-label use of Abilify, prosecutors said.
A sales force also visited child psychiatrists and other pediatric specialists and urged them to prescribe Abilify.
The complaint did not specify what the drug was used for.
Sullivan said he considered it the most serious allegation against Bristol-Myers Squibb though he had no evidence that the drug had harmed anyone.
"You have to start with patient safety," he said at a news conference.
Bristol-Myers Squibb participated in pricing schemes, including one involving its anti-depressant drug Serzone, that defrauded the Medicaid program, prosecutors said.
Bristol-Myers Squibb and Apothecon also inflated prices for a wide assortment of cancer-fighting and generic drugs, deceiving federal healthcare programs that established reimbursement rates based on those prices, prosecutors said.
The company provided records about renumerations to physicians and other abuses and took steps to prevent further fraudulent activities, factors the government took into account in its decision to settle the matter and not pursue criminal charges, Sullivan said.
In a statement posted on its website, the company said the settlement will not affect its ongoing business with customers, including the federal government.
"Bristol-Myers Squibb is pleased to have resolved these matters from the past and is proud of its commitment to conduct business with the highest standards of integrity in its mission to extend and enhance human life," the company said.
The company said it has also entered into a five-year "corporate integrity agreement" with the Office of the Inspector General of the Department of Health and Human Services that requires it to develop programs to ensure compliance with the law.
Jeff Macdonald, a spokesman for New York-based Bristol-Myers Squibb, said the suits involved activities of employees from the late 1990s to 2005.
The company has improved staff communication and training and now has a "very robust compliance program," he said.
Concerning Abilify, he said, Bristol-Myers Squibb always barred marketing of drugs for off-label use.
But management now makes sure the sales force, which consists of several thousand employees across the United States, understands the rules and obeys them.
Dr. Jerome Kassirer, a professor at Tufts University School of Medicine and outspoken critic of drug companies, is skeptical.
"A lot of these companies, when they get sued for a few million dollars, they just consider it loose change," he said. "I haven't seen any let-up in what they're doing. Most of the time, when they're caught, they'll often say, 'It was a renegade, someone who wasn't following the instructions. Our policy says we shouldn't do that.' "
Similarly, Thomas M. Greene, a Boston lawyer representing one of the whistleblowers, said the allegations are serious because off-label use has the potential to harm patients.
"What happens when you promote a drug that is not effective?" he said. "You're depriving sick people of some other effective treatment."
Prosecutors began investigating Bristol-Myers Squibb as a result of six whistleblower suits against the company in Massachusetts and one suit in Florida.
Federal law allows whistleblowers with knowledge of fraud against the government to bring suits on its behalf.
The agreement identifies whistleblowers who brought suits but provides no details about them.
A spokeswoman for Sullivan said detailed records are sealed but will be made public soon.
Under the federal law, the whistleblowers will receive a total of about $50 million as their share of the settlement, prosecutors said.
US Attorney R. Alexander Acosta, of the Southern District of Florida, who also participated in the settlement, said the company's pricing scheme gouged the government.
"Corporations cannot continue to mislead the government into paying vastly exaggerated prices by exploiting a healthcare system based on trust and fair play," Acosta said in a statement.
The two larger drug-company fraud settlements arranged by federal prosecutors in Massachusetts were one for $885 million in 2001 with TAP Pharmaceutical Products and another for $704 million in 2005 with Serono.
Although the settlement was not finalized until the past few days, an agreement in principle was announced by Bristol-Myers Squibb in December.
The company said in its annual report to the Securities Exchange Commission in February that it had reached an agreement in principle for a settlement of $499 million.
The rest of the money covers interest.http://www.boston.com/business/glob...firm_subsidiary_settle_suits_for_515m/?page=2