Earlier this month, the Department of Justice announced another settlement in a Medicaid Rebate False Claims Act (FCA) case. In this case, United States ex rel. Streck v. Bristol-Myers Squibb Co., Civil Action No. 2:13-CV-7547 (E.D. Pa) Bristol Myers Squibb (BMS) agreed to pay $75 million: $41 million to the United States and $34 million to states. The relator in this case has been litigating Medicaid Rebate FCA cases for over a decade, settling some claims along the way.
The relator has filed three separate actions, two in the Eastern District of Pennsylvania (Streck I and II) and one in the Northern District of Illinois (Streck III). In all of the cases, the relator makes the same core allegations. As we explained back in 2012, the complaints allege that so-called “Discount Defendants” improperly treated bona fide service fees as discounts, and that so-called “Service Fee” Defendants, improperly offset price appreciation credits against service fees instead of factoring them into the AMP calculation. According to the relator, the result of both alleged schemes was to unlawfully reduce the companies’ AMP’s and correspondingly reduce the rebates paid by the manufacturers to the states and thereby increase the federal government’s payment for drugs, resulting in both traditional and reverse FCA claims.
The outcomes in these cases have varied based on the time periods at issue and the classification of the defendants. In 2018 the Third Circuit affirmed the dismissal of pre-2012 claims against a group of Service Fee Defendants (Streck I), putting an end to that case. In the BMS case, another judge in the Eastern District of Pennsylvania, followed the same analytical framework as Streck I, but denied a motion to dismiss, and a motion for summary judgment (Streck II). In the the Northern District of Illinois, Streck III also survived a motion to dismiss. With the BMS settlement, only Streck III continues to be litigated.
As noted in these cases and in our prior posts, the law and regulatory guidance on AMPs has changed since these cases were filed. AMP reporting remains a complex area and one that prosecutors and whistleblowers will continue to investigate and litigate.