California lawsuit accuses Bristol-Myers Squibb of fraud, kickbacks
California regulators are taking aim at giant drug maker Bristol-Myers Squibb Co., accusing it of bribing doctors and pharmacists to use its products by offering thousands of cash kickbacks, gifts and “happy hours” with the Los Angeles Lakers.
The case against the drug company was developed with the help of former Lakers player Lucius Allen and his wife, Eve, who worked for Bristol-Myers and provided access to the basketball team, according to a lawsuit made public Friday. Doctors and family members were invited to Lakers Dream Camps arranged by the company, the lawsuit said.
Doctors also were treated to tickets and luxury suites for Lakers games, and received pointers, balls and autographs from some of the team’s most famous players, the suit alleges.
New York-based Bristol-Myers vowed to fight the case. “Bristol-Myers Squibb believes this lawsuit has no merit and the company will defend itself vigorously,” it said in a statement.
The California lawsuit was originally filed in March 2007 by Michael Wilson, a former Bristol-Myers employee. It was sealed until last week when a judge granted a request by the state Department of Insurance — which joined the suit — to make it public.
The case is the latest major legal action against Bristol-Myers over fraud accusations. In 2007, it paid $515 million to settle allegations by the federal government and other states that it used a kickback scheme to defraud the Medicare and Medicaid insurance programs.
As part of the settlement, Bristol-Myers entered into a “corporate integrity” agreement with the U.S. Department of Health and Human Services that required it to report accurate sales and manufacturing prices for drugs covered by government insurance programs.
The California lawsuit accuses Bristol-Myers of targeting the private insurance industry, making thousands of payments to “high prescribing physicians” who wrote prescriptions for many of its well-known drugs, including Plavix, Abilify and Avapro that together accounted for more than half of its $19.5 billion in sales last year.
The lawsuit said that Bristol-Myers paid nearly 15,000 kickbacks to doctors from 1999 to 2005.
At a Los Angeles news conference Friday, Insurance Commissioner Dave Jones said his department has evidence showing that the alleged illegal activity has continued until 2011.
Jones called the lawsuit the largest health insurance fraud case ever pursued by a California state agency.
“We need to be sure that doctors are prescribing drugs because those drugs are best for their patients and not because a pharmaceutical company provided doctors with trips and kickbacks,” he said. “These illegal practices drive up the cost of health insurance for millions of Californians.”
Jones said his department was not investigating any criminal wrongdoing, only the civil allegations in the lawsuit. The Los Angeles County district attorney’s office declined to comment on the case.
A spokesman for the Lakers said he was unaware of the camp for doctors or the involvement of Allen in the pharmaceutical company. “The only relationship we have with Lucius Allen is as an ex-player,” John Black said.
Allen, his wife and fellow plaintiff Wilson declined to comment because the case is ongoing, said one of their private attorneys, Loren Jacobson.
Lucius Allen worked as a sales representative for six years, promoting cardiovascular and diabetes drugs.
He left the company in 2003 to go on disability, Jacobson said.
His wife worked at the drug maker as an integrated health manager until 2002, responsible for getting the firm’s drugs onto insurance companies’ lists of covered medications.
Jacobson said that after the 2007 federal settlement, Wilson asked the Allens if they would join his lawsuit. They did so in July 2010.
“They had information that the company had been using kickbacks to get the doctors to write prescriptions and to get the drugs” on insurance lists, said Jacobson of the Waters & Kraus law firm. “After coming out of Bristol-Myers Squibb and thinking about it, they felt like what they saw there was problematic.”
The lawsuit said that Bristol-Myers gained “special access to the Lakers” through the Allens, and that the company rented suites at Staples Center and held catered events for physicians at Lakers games.
The company also produced a sales plan called “Rounding up the Docs!” that instructed sales representatives at dinner events to gain commitments from doctors to prescribe its drugs and to monitor the physicians weekly to evaluate the success of the program.
Consumer advocates say the lawsuit underscores a well-known problem that has played a big part in driving up the cost of medicine and insurance rates.
Drug companies “literally are addicted to these kickbacks,” said Patrick Burns, a spokesman for the nonprofit Taxpayers Against Fraud in Washington. “It’s amazing how little money it takes to bribe a doctor.”
The industry trade group Pharmaceutical Research and Manufacturers of America said its members strive to meet high ethical and legal standards in their interactions with medical providers. The industry “continues to believe that compliance with the law is critically important,” general counsel Diane Bieri said in a statement.
The California Medical Assn. said it requires doctors to disclose financial relationships with drug companies and “supports requiring pharmaceutical companies to report all payments, including cash, gifts, travel, entertainment, sports, recreation or lodging given to physicians,” spokeswoman Rosanna Westmoreland said.