March 18, 2011 / 7:40 PM / 9 years ago

California joins Bristol Myers kickbacks lawsuit

LOS ANGELES (Reuters) - California’s insurance regulator has thrown its weight behind a lawsuit accusing Bristol Myers Squibb Co of dishing out kickbacks to doctors who prescribe its drugs.

The whistleblower lawsuit, brought by former employees of the pharmaceutical giant and previously under seal, accuses Bristol Myers Squibb of resorting to bribes to try to ramp up sales in the country’s wealthiest state.

“Bristol-Myers Squibb believes this lawsuit has no merit and the company will defend itself vigorously,” company spokeswoman Laura Hortas said.

The California Department of Insurance, intervening in the case, says it will seek hefty penalties for the damage done to a private health insurance sector that ultimately paid for the drugs.

The agency will pursue monetary penalties and the disgorgement of millions of dollars in “unlawful profits” made as a result of kickbacks, plus treble damages, it said in a statement.

“This sort of fraud has long plagued our health insurance system, leading to billions of dollars annually in added health care costs nationally,” Commissioner Dave Jones said in a statement.

According to the Department of Insurance, the lawsuit brought by two former employees alleges that Bristol Myers Squibb instructed salespeople to court doctors with sports tickets, fancy meals, all-expense-paid trips and gifts.

Pharmaceutical firms are grappling with higher costs from U.S. healthcare reform as well as pressure from governments and insurers to curb prices.

In January, Bristol-Myers Squibb reported a disappointing quarterly profit and forecast roughly flat earnings this year instead of the 3 percent growth Wall Street had expected.

The whistleblower case in Superior Court of California, County of Los Angeles is The People of the State of California et al v. Bristol Myers Squibb Inc. et al, BC 367873.

Reporting by Edwin Chan, editing by Matthew Lewis

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