>> Bristol says Plavix deal under U.S. criminal probe
Thu Jul 27, 2006 2:48 PM ET By Ransdell Pierson and Bill Berkrot
NEW YORK, July 27 (Reuters) - Drugmaker Bristol-Myers Squibb Co. <BMY> on Thursday said the federal government is conducting a criminal antitrust probe of a settlement that would allow the company to stave off generic competition for its best-selling product for years.
Its shares fell 7.4 percent to $24.06 in afternoon trading on the New York Stock Exchange.
Settlements by drugmakers to delay the sale of generic forms of their medicines are coming under increased scrutiny from U.S. regulators and lawmakers, who fear consumers are being denied access to less-expensive medicines.
…Bristol said the probe by the U.S. Department of Justice is related to a settlement between Bristol and Sanofi-Aventis <SNY>, its U.S. marketing partner for the anti-clotting medicine Plavix, and generic drugmaker Apotex.
Plavix accounts for 30 percent of Bristol's profits.
"This criminal probe will scare many investors in the short term, but I don't think the eventual financial impact will be too great," said Shaojing Tong, an analyst with Mehta Partners.
Bristol and Sanofi-Aventis had been locked in a high-stakes U.S. patent battle with Apotex, which had hoped to soon launch a cheaper generic form of Plavix, the world's second-biggest drug.
Under the proposed settlement, Apotex, based in Canada, would not begin selling its copycat drug until June 2011. The deal, which had eased investor concerns about Bristol's financial future, has been under review by the U.S. Federal Trade Commission (FTC).
Bristol-Myers said the Justice Department's Antitrust Division is probing the settlement,
"We do not have any specific information on the basis for or the focus of the investigation," Bristol spokesman Tony Plohoros said. He said the company's conduct related to the proposed settlement was "entirely appropriate."
Bristol's methods for blocking generics have frequently come under scrutiny. In 2002, the company agreed to pay states, consumers and rivals $670 million to settle antitrust suits that accused it of unfairly blocking generic forms of its anxiety treatment, BuSpar, and cancer drug Taxol.
Months later, Bristol reached an agreement with the FTC requiring the drugmaker under a 10-year consent decree to stop misusing patent laws to block generics. It requires Bristol to get approval from the states when entering into settlement agreements with generic drugmakers.
Bristol has also run into trouble for an accounting scandal, admitting that senior officials for years had inflated drug revenue by manipulating sales to wholesalers. It agreed in 2004 to pay $150 million to a shareholder fund after being accused of lying about its accounting.
State attorneys general are expected to decide by tomorrow whether to approve Bristol's and Sanofi's settlement with Apotex, according to industry analysts.
Tong said he believes that if the Plavix settlement is rejected, Bristol will resume its patent-infringement claims against Apotex and prevail in court.
If the patent battle resumes, Dresdner Kleinwort analyst Benjamin Yeoh said a court decision would be unlikely until 2008, keeping the Apotex generic version at bay until then.
Speaking as one who has some ;-) familiarity with BMS's legal/regulatory group, I find it astonishing that they are getting sued.
BMS is pretty well-known as the most conservative big pharma company, from both a legal and regulatory standpoint. Very by-the-book, to the letter. At least for the past several years, can't speak to what they were like before then.
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