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Bristol-Myers Squibb has been hit with a class action RICO suit for allegedly inflating the prices of its cancer drugs including Taxol, a widely used breast cancer drug. Attorneys Jeffrey Kodroff and Theodore M. Lieverman of Spector Roseman & Kodroff in Philadelphia, along with Emily Maruja Bass of Gaynor & Bass in New York, announced Monday they filed the suit in the U.S. District Court for the Southern District of New York. The lead plaintiff in the suit is the Teamsters Health & Welfare Fund of Philadelphia and Vicinity, which is asking to represent a class that would include anyone who relied on the nationally published “average wholesale price,” or AWP, when paying for certain drugs. The drugs named in the suit are Taxol, Paraplatin, Blenoxane, Vepesid, Etopophos and Ifex. The suit alleges that New York-based Bristol-Myers targeted the class by fraudulently inflating the AWP as reported in industry publications, knowing that patients, insurers and employee benefit funds would rely upon it as a basis for determining how much to pay. According to the suit, the AWP quoted by Bristol-Myers bears no relationship to the actual wholesale price it charges to doctors and other purchasers, and is substantially higher than the actual price. Kodroff said Monday that the “disparity between what the doctor actually pays to obtain the drug from Bristol, and the AWP upon which the Teamsters Fund and other payors rely to determine its reimbursement, is known informally as ‘the spread.’ Bristol markets its products to doctors by emphasizing the amount of the spread that can be recovered by the physician.” The suit alleges that Bristol-Myers “used the artificially inflated AWP as a means of marketing its cancer drugs.” When the company’s employees talked to providers about choosing Bristol-Myers’ drugs over other companies’ drugs, the suit says, they “emphasized that because its AWP was high, the monetary return to the providers was better than the competitors.” The suit accuses the drug company of engaging in a scheme to defraud. It also alleges that the company “engaged in a pattern and practice of paying illegal kickbacks, disguised as free goods, rebates and education grants to medical providers to induce them to use its cancer drugs.” Bristol-Myers spokesman Bob Laverty could not be reached for comment Monday. Other employees in the company’s public relations department said that only Laverty could comment on the suit. To illustrate how the alleged scheme worked, the suit outlines Bristol-Myers’ price representations for the drug Blenoxane. Between 1995 and 1998, the AWP for Blenoxane increased from $276.29 to $304.60. But during the same time, the suit says, the drug’s actual cost decreased, from $224.22 to $155. Kodroff noted that one of the other drugs involved in the case, Taxol, was developed by Bristol using $21 million in federal funds from the National Institutes of Health. Taxol is a widely prescribed treatment for breast cancer. William Einhorn, administrator for the Teamsters Fund, said, “our participants are getting squeezed by these inflated prices. Everyone knows that medical costs are high enough without an unfair and artificial pricing mechanism.” Kodroff said Congress and the Justice Department have been investigating AWP inflation as it relates to overpayments being made by Medicare and Medicaid. The suit cites RICO claims under Sections 1962(a) and 1962(c) as well as a claim of “recurring and deceptive commercial practices” under the New York State General Business Law and a claim of common law fraud.

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