[Ip-health] Wall Street Journal: FBI Raids Offices At Bristol-Myers Over Plavix Deal

[Thiru Balasubramaniam]

FBI Raids Offices
At Bristol-Myers
Over Plavix Deal

By *JOHN CARREYROU*, *BARBARA MARTINEZ* and *JOHN R. WILKE*
July 28, 2006; Page A3

Federal Bureau of Investigation agents raided the office of
*Bristol-Myers Squibb* Co. Chief Executive Peter Dolan as part of a
criminal investigation into an agreement the pharmaceutical company
struck to delay the launch of a generic version of its best-selling drug.

Bristol-Myers yesterday disclosed the criminal probe, which also is
focused on Paris-based *Sanofi-Aventis* SA. The investigation concerns a
deal struck by Bristol-Myers and Sanofi with Apotex Inc. of Canada in
March. Under the agreement, which was struck to settle litigation, the
two companies proposed to pay Apotex a minimum of $40 million to hold
off launching a generic version of the blood thinner Plavix until 2011,
the year the main patent protecting Plavix expires.

Sanofi developed Plavix and sells the drug outside the U.S., while
Bristol-Myers holds the rights to the American market. Plavix is the
world's No. 2 drug, after *Pfizer* Inc.'s Lipitor, with $5.9 billion in
global sales last year, according to IMS Health. Bristol-Myers's share
of those sales was nearly $3.8 billion.

The settlement between the three companies is critical for Bristol-Myers
as the New York company emerges from a difficult period that included a
federal probe into its accounting. It would enable Bristol-Myers and
Sanofi to protect at least $30 billion in revenue, assuming that Plavix
sales hold steady in the next five years. However, analysts expect the
drug's sales to continue to grow. Federal regulators have expressed
concern that such deals hurt consumers by keeping drug costs high.

Bristol-Myers shares fell 7.5% to $24.04 in 4 p.m. composite trading on
the New York Stock Exchange.

FBI agents, working on behalf of the antitrust division of the Justice
Department, showed up at Bristol-Myers's Manhattan headquarters on
Wednesday and left with batches of documents, a person familiar with the
matter said. The investigators searched the office of Mr. Dolan, among
others. Mr. Dolan was not available for comment, a Bristol-Myers
spokesman said.

It isn't clear what conduct the government is investigating. The
criminal probe arose from a referral to the Justice Department by the
Federal Trade Commission. The FTC and state attorneys general have been
conducting a civil review of Bristol-Myers's and Sanofi's settlement
with Apotex. Under a consent agreement, Bristol-Myers and Sanofi need
approval from the FTC and the states to consummate the settlement.

The companies could face prosecution if they misled the government in
any way when the FTC and the states reviewed the deal. And if the
companies shared information on pricing or other confidential
competitive information during the negotiation of the proposed
settlement, that could be seen as criminal collusion between rivals.

Under an initial draft settlement the companies submitted for regulatory
review in March, Bristol-Myers had agreed not to launch an authorized
generic of Plavix in early 2011, giving Apotex exclusivity over the
generic Plavix market for six months. But the FTC opposed that clause,
and the three parties submitted a new version of the settlement without
it two months ago. The Justice Department investigation may center on
the authorized generic issue.

The FTC and Justice Department declined to comment. Bristol-Myers and
Sanofi both said they were informed of the criminal investigation
Wednesday, but declined to comment on its specifics.

The federal investigation comes as regulators are increasingly skeptical
of deals struck between branded-drug companies and generic manufacturers
that delay introduction of lower-cost generic pills.

The state attorneys general are expected to inform Bristol-Myers whether
they approve the revised agreement today.

On a previously scheduled conference call to present Bristol-Myers's
second-quarter earnings, Mr. Dolan said the company intended to fully
cooperate with the investigation. A company spokesman said Bristol
"believes that all of its conduct relating to the proposed Plavix
settlement has been entirely appropriate and coordinated throughout with
senior outside counsel."

Bristol-Myers and Sanofi said they intend to resume litigation against
Apotex if the state attorneys general and the FTC reject the settlement.

Bristol-Myers said it earned $667 million, or 34 cents a share, in the
second quarter, on revenue of $4.87 billion. In the second quarter of
2005, the company reported a $1 billion, or 51-cents-a-share, profit,
but the number was boosted by tax benefits.