Bristol-Myers Squibb must answer lawsuit claiming it knowingly underpaid Medicaid

A federal judge in Philadelphia has ruled that Bristol-Myers Squibb must face a whistle-blower lawsuit alleging the drugmaker knowingly underpaid rebates it owed to state Medicaid programs.

Here are four things to know:

1. The lawsuit was brought by whistle-blower Ronald Streck, PharmD, a pharmacist and lawyer who previously served as the CEO of an association of prescription drug manufacturers.

2. The suit contends that from Jan. 1, 2007, to Dec. 31, 2013, Bristol-Myers fraudulently manipulated the calculation of the Medicaid rebate it owed. It is accused of underreporting the average manufacturer price, the price a wholesaler pays per unit. CMS uses  this price to determine the amount a manufacturer owes the states.

3. U.S. District Judge Timothy Savage dismissed Bristol-Myer's argument that the company didn't act knowingly because the law mandating how to calculate rebates was ambiguous during the years in question.

4. "We conclude that Dr. Streck has alleged sufficient facts to state a false claims cause of action. He alleges facts which, if proven, will establish that BMS knowingly or, at least, recklessly reported and paid lower rebates than it owed. Therefore, we shall deny BMS' motion to dismiss," the lawsuit reads.

Read the full lawsuit here.

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