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California lawsuit accuses drug powerhouse of bribing doctors

High-prescribing physicians were compensated with expensive gifts by Bristol-Myers, the suit alleges, but the drugmaker says the allegations have no merit.

By Alicia Gallegos — Posted April 4, 2011

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California's insurance commissioner is suing pharmaceutical giant Bristol-Myers Squibb Co., accusing the drug company of bribing physicians using an assortment of kickbacks to prescribe the company's drugs.

According to the lawsuit, physicians deemed "high prescribers" by Bristol-Myers received trips to basketball camps, free concert tickets, autographed basketball merchandise, liquor, golf outings and other rewards to boost prescriptions. Low-prescribing doctors were warned by drug reps that they would not receive free samples or event invitations, the suit said.

The suit was filed in 2007 by former Bristol-Myers employees in the Superior Court of the State of California for the County of Los Angeles. The suit was sealed until early March of this year, when California Insurance Commissioner Dave Jones joined the complaint and requested that it be made public.

California insurance companies have spent more than $3.5 billion in covering drug costs stemming from Bristol-Myers' kickback scheme, Jones said. The lawsuit is the largest health insurance fraud case 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," Jones said in a statement. "These illegal practices drive up the cost of health insurance for millions of Californians, ... and I will seek to stop such unlawful practices."

Bristol-Myers said in a statement that the lawsuit has no merit and that the company plans to defend itself against the allegations.

The company said it "has been and remains committed to upholding the highest standards of business integrity and ethics and has a robust compliance program."

Kickback culture?

Pervasive kickback conduct within Bristol-Myers started as early as 1999, court documents allege, with training literature for drug reps advocating the use of incentives to prompt more prescriptions from doctors.

A 2001 sales plan called "Rounding up the Docs" encouraged drug reps to confront doctors at dinner events and gain prescription commitments from them, the suit said. Bristol-Myers allegedly kept tallies of the highest-prescribing doctors, listing each private insurer that covered their patients.

American Medical Association policy states that any gifts accepted by physicians from drug companies should primarily entail a benefit to patients and should not be of substantial value. "No gifts should be accepted if there are strings attached," the AMA policy says. "For example, physicians should not accept gifts if they are given in relation to the physician's prescribing practices."

The California Medical Assn. also has strict conflict-of-interest policy for physicians, said CMA spokeswoman Rosanna Westmoreland. California doctors are required publicly to disclose any substantial payment they receive from pharmaceutical companies, including cash, gifts, travel and lodging.

Bristol-Myers was among 55 drug companies that signed on to an ethical interactions code established by the Pharmaceutical Research and Manufacturers of America, said PhRMA spokeswoman Kate Connors. Under part of the voluntary code, companies are prohibited from providing entertainment or recreational items such as theater tickets and vacations to any health care professional who is not part of the company.

Diane Bieri, PhRMA's executive vice president and general counsel, said the drug industry's commitment to compliance is demonstrated by the many firms that agreed to the code.

"Our member companies devote significant resources to internal compliance programs and thorough investigations of any reported misconduct, activities that complement the government's enforcement efforts," she said.

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