BMS FACES WIDER CRIMINAL PROBE INTO PLAVIX SETTLEMENT
Bristol-Myers Squibb's (BMS) problems continue as the company lost substantial revenue from generic competition to its blood thinner Plavix and now faces potentially broader criminal charges related to the drug.
The Department of Justice (DOJ) is expanding its investigation into BMS' proposed patent settlement with Apotex to determine whether BMS violated federal securities laws, the company announced. BMS has been under investigation for its plan to pay Apotex to not launch its generic version of Plavix (clopidogrel bisulfate) until the patent expires in September 2011, an arrangement known as a reverse payment. The case is significant for BMS as Plavix is its highest-selling product, with net sales of $3.2 billion in 2005, according to the company.
Apotex distributed a year's worth of the generic before being ordered by a federal judge to stop, hurting BMS in the third quarter by accounting for between $525 million and $600 million in lost revenue, the company said. BMS believes that sales of the generic will continue to affect Plavix sales in 2007.
Now, the DOJ is expanding its investigation to determine whether the proposed settlement violated an agreement the company had entered into with the SEC, BMS said in an Oct. 26 release. The SEC had entered into a Deferred Prosecution Agreement with BMS in 2005 over charges of securities fraud. Under the agreement, the federal government has the discretion to prosecute the company if it finds evidence of criminal conduct.
In the original SEC agreement, BMS agreed not to violate certain provisions of securities laws. The company also paid $150 million to a class of shareholders. Furthermore, the company agreed to limit sales of its products to its direct customers, including wholesalers, distributors and government purchasers, based on expected demand or on amounts that do not exceed one month of inventory.