[Ip-health] Bristol-Myer settlement for improper pricing and marketing

[Benjamin Krohmal]

Daily Health Policy Report
Prescription Drugs | Bristol-Myers Squibb Agrees To Settle Federal
Investigation of Pricing, Sales, Marketing Practices for $499M
[Dec 22, 2006]

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?
hint=3&DR_ID=41828

       Bristol-Myers Squibb on Thursday announced a proposed $499
million settlement for a federal investigation into the company's
pricing and marketing practices, the Newark Star-Ledger reports
(Jordan, Newark Star-Ledger, 12/22). The settlement -- which has been
tentatively accepted by BMS, the Department of Justice and the U.S.
Attorney for the District of Massachusetts -- would cover
investigations into BMS' marketing of schizophrenia and bipolar
disorder treatment Abilify for off-label uses (Schmit, USA Today,
12/21). BMS spokesperson Jeff MacDonald said the proposed settlement
also covers an investigation into alleged overbilling of Medicare and
Medicaid through inflating average wholesale prices, which are used
by the government to set drug reimbursements. The company has not
resolved a private class-action lawsuit related to AWPs, MacDonald
added (Newark Star-Ledger, 12/22). The investigations covered more
than five years through 2005. Under the agreement, there would be no
criminal charges filed against the company (USA Today, 12/21). As a
part of the settlement, BMS is expected to sign a corporate integrity
agreement with HHS regulators, who will be charged with monitoring
industry compliance with federal health care programs. Such
agreements typically require companies to train employees about
federal rules, establish hot lines for workers to report violations
and follow other procedures stated in government compliance
guidelines, according to health care lawyer Scot Hasselman (Feder,
New York Times, 12/22). The settlement requires final approval from
DOJ (Witkowski, AP/South Florida Sun-Sentinel, 12/22). MacDonald said
DOJ's final decision likely will take "a couple of months" (Newark
Star-Ledger, 12/22).

Financial Moves, Additional Legal Issues
BMS said it will increase the size of reserves set up to cover the
cost of the investigations by $353 million, which it will report in
the fourth quarter. Separately, the company will take a $220 million
charge related to debt restructuring. BMS said its 2006 earnings are
now expected to be 72 cents to 77 cents per share, down from previous
projections of 97 cents per share to $1.02 per share (Barris/Moore,
Wall Street Journal, 12/22). The settlement would "not clear [BMS']
legal slate," the Times reports. The company still faces litigation
related to its handling of generic competition for its blockbuster
drug Plavix from Canadian drug maker Apotex. In addition, the company
signed a settlement agreement in July 2005 over "channel stuffing,"
in which BMS allegedly inflated sales figures by overselling its
products to customers who then stored the drugs in their warehouses.
Under that settlement, the charges will be dropped next year if BMS
does not commit further violations of the practices outlined in the
agreement (New York Times, 12/22).




Benjamin Krohmal
Consumer Project on Technology
Tel: +1-202-332-2670 ex. 14
Fax: +1-202-332-2673
ben.krohmal@cptech.org