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Bristol-Myers Bribed Doctors in Drug Scheme, California Commissioner Says

Bristol-Myers Squibb Co. (BMY) bribed doctors to prescribe the pharmaceutical company’s drugs, according to a whistle-blower lawsuit being pursued by the California insurance commissioner.

Commissioner Dave Jones said at a press conference today in Los Angeles that the drugmaker’s sales people in California provided physicians with trips to basketball camps and other kickbacks to boost prescriptions of its drugs, including Plavix and Pravachol. The lawsuit is the largest health-insurance fraud case pursued by a California agency, Jones said.

California insurance companies spent $3.5 billion to cover the costs of the drugs involved in the lawsuit, according to the commissioner. The lawsuit seeks $10,000 for each fraudulent insurance claim caused by the alleged kickbacks, disgorgement of illegal profits, and triple the amount of damages.

“This sort of fraud has long plagued our health-insurance system, leading to billions of dollars annually in added health- care costs nationally,” Jones said today in a statement.

Three former employees of New York-based Bristol-Myers filed the whistle-blower action under seal in 2007 in Superior Court in Los Angeles. The suit was unsealed last week. The so- called qui tam lawsuit was taken over by the commissioner, who will share any recoveries with the employees.

Kickbacks Alleged

The lawsuit claims that the company provided illegal kickbacks to doctors in order to increase pharmaceutical sales in California. Bristol-Myers in 2007 agreed to pay $515 million to settle U.S. allegations it overcharged the government for drugs and promoted medicines for unapproved uses.

“Bristol-Myers Squibb believes this lawsuit has no merit and the company will defend itself vigorously,” company spokeswoman Laura Hortas said today in an interview.

The complaint alleges that Bristol-Myers sales representatives, with permission from management, held happy hours with members of the Los Angeles Lakers and that “high prescribing” physicians were routinely invited to watch Lakers home games at a luxury suite.

The drugmaker also paid for golf outings, samba dance events for Hispanic doctors, tickets to the Los Angeles Philharmonic, and bought liquor for physicians to induce them to increase their prescriptions and to reward them for doing so, according to the complaint.

If a physician didn’t increase his prescriptions of the company’s drugs, Bristol-Myers used a tactic called “shaking the doctors down,” whereby sales representatives would warn the physicians he wouldn’t be getting free samples or invited to dinner events and resort events, according to the complaint.

Jones said at today’s news conference that California prosecutors had opted not to intervene in the case.

The case is California and Michael Wilson v. Bristol Myers Squibb Inc., BC 367873, California Superior Court (Los Angeles County).

To contact the reporters on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net

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