Benefits Fund Hits Drug Firm With RICO Suit

November 20, 2001 ( - Drugmaker Bristol-Myers Squibb has been smacked with a class action RICO suit for allegedly inflating the prices of its cancer drugs, according to the Legal Intelligencer.

The lead plaintiff in the suit is the Teamsters Health & Welfare Fund of Philadelphia and Vicinity, which hopes 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, a widely used breast cancer drug, Paraplatin, Blenoxane, Vepesid, Etopophos and Ifex.

The suit alleges that Bristol-Myers targeted the class by fraudulently inflating the AWP as reported in industry publications, fully aware that patients, insurers and employee benefit funds would rely upon it as a basis for determining how much to pay.

Attorneys Jeffrey Kodroff and Theodore M. Lieverman of Spector Roseman & Kodroff in Philadelphia and Emily Maruja Bass of Gaynor & Bass in New York, filed the suit in the U.S. District Court for the Southern District of New York yesterday.

According to the suit, the AWP quoted by Bristol-Myers has no relationship with the actual wholesale price it charges to doctors and other purchasers, and is significantly higher than the actual price.

Additionally, the suit alleges that Bristol-Myers “used the artificially inflated AWP as a means of marketing its cancer drugs.” And, 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 their competitors.”

Meanwhile, the suit accuses Bristol-Myers of engaging in a scheme to defraud. Allegations 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” are also included.

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.

-Nicole Halsey