City Recoups $7.5M in Drug Overcharges
By TOMMY HALLISSEY

Bristol-Myers Squibb July 15 agreed to pay the city $7.5 million as restitution for what city lawyers allege was a fraudulent scheme to inflate the cost of drugs in the Medicaid program.

A National Settlement

The city's agreement is part of a nation-wide settlement of similar claims brought by the New York State Attorney General's Medicaid Fraud Control Unit. The settlement is expected to bring the state and its counties more than $40 million.

"This lawsuit is one of several that the city brought in an effort to rein in the widespread fraudulent practices that unlawfully inflate the city's Medicaid costs," said Michael Cardozo, the city Corporation Counsel. "The settlement will return to the city almost the full value of its claims against Bristol-Myers Squibb."

In August 2004, the Bloomberg administration filed suit against 44 pharmaceutical companies alleging that the defendants fraudulently inflated the average wholesale prices of their drugs, which make up the basis for Medicaid payments. It said the inflated prices resulted in overcharges of millions of dollars to its Medicaid budget while violating Federal and state Medicaid laws.

The city is still pursuing suits against other drug companies. "We are pleased at the successful resolution reached with one of the defendants, and hope to reach similarly successful resolutions with others," Mr. Cardozo said.

The Law Department handled the case with the help of outside counsel Kirby McInerney, a law firm with experience in health-care and consumer litigation.