[Ip-health] nytimes: BMS will plead guilty to false statements re: Plavix generic competitor

[Peter Maybarduk]

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[ Picked text/plain from multipart/alternative ]
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The investigation involved allegations that the company reached a
secret agreement with the Canadian drug maker Apotex to keep a
generic copy of Plavix off the market.

Bristol-Myers is a co-marketer of the drug with the French company,
Sanofi-Aventis, under a patent that is not set to expire until 2011.

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NYTimes * C3
May 11, 2007

Drug Maker to Plead Guilty to Making False Statements

By STEPHANIE SAUL
Bristol-Myers Squibb said yesterday that it would plead guilty to
criminal charges that it made false statements to the government, a
move meant to end a federal antitrust investigation of the drug
maker=92s botched efforts last year to preserve a lucrative monopoly
for the anti-clotting medicine Plavix.

The company said that under a preliminary agreement with the
Department of Justice, it would plead guilty to two counts of making
false statements to a federal agency.

The charges, which could result in a fine of up to $1 million, are
less serious than the original antitrust allegations that ignited a
Federal Bureau of Investigation search at the company=92s Manhattan
offices last July. If proven, those antitrust charges could have
resulted in far greater criminal and civil sanctions. Under such an
agreement, the government would not pursue the more serious criminal
charges in exchange for the guilty plea.

The company did not disclose the full details of its agreement with
the Justice Department, and no formal charges have yet been filed. A
Justice Department spokeswoman, Gina Talamona, said, =93We have no
comment unless and until charges and a plea agreement are filed with
the court.=94

It is unusual for corporations to plead guilty to criminal charges,
which can leave them vulnerable to the loss of government business.
But in a statement distributed to reporters yesterday, Bristol-Myers
Squibb said it did not believe it would lose government business,
indicating such an agreement may also be part of its deal with the
Justice Department.

Professor John C. Coffee, a securities law expert at Columbia
University, said that by pleading guilty to making false statements,
the company would avoid possible triple damages in related civil
lawsuits. Such civil damages are allowed if companies are found
guilty of criminal antitrust violations.

The antitrust division of the Justice Department started the criminal
investigation last July, when F.B.I. agents rifled through desks at
the company offices on Park Avenue. One apparent target of the search
was the company=92s chief executive at the time, Peter R. Dolan, whom
the board forced out several weeks later.

The investigation involved allegations that the company reached a
secret agreement with the Canadian drug maker Apotex to keep a
generic copy of Plavix off the market.

Bristol-Myers is a co-marketer of the drug with the French company,
Sanofi-Aventis, under a patent that is not set to expire until 2011.
Bristol-Myers=92 share of the drug=92s sales were $3.8 billion in 2005,
making it the company=92s largest product by far.

Apotex, which has challenged the Plavix patent, had threatened to
sell a generic copy of the drug last year. To avoid that, Mr. Dolan
had tried to settle a lawsuit with Apotex.

Terms of any such settlement deal by Bristol-Myers were supposed to
be cleared by the Federal Trade Commission. But court papers and
testimony in the civil case stated that Bristol-Myers had not
disclosed major parts of the deal to the F.T.C. but instead had made
a secret side deal.

After the settlement deal collapsed, Apotex briefly sold its product
in the United States for three weeks last August, flooding the market
with up to six months of its product and undercutting Bristol-Myers=92
business.

Federal District Judge Sidney H. Stein, who is overseeing the patent
dispute, eventually halted the sale of Apotex=92s drug. He is expected
to issue a ruling sometime this year on the validity of the Plavix
patent.

In papers and arguments before Judge Stein, a lawyer for Apotex said
that an assistant to Mr. Dolan, Dr. Andrew G. Bodnar, had negotiated
the secret agreement. Dr. Bodnar is no longer employed by Bristol-Myers.

It was not clear yesterday whether charges would be filed against any
former executives of the company. But in its statement, the company
yesterday seemed to be admitting that one of its executives had made
such a deal.

The statement referred to =93representations made by a former Bristol-
Myers Squibb senior executive during the renegotiation of the
proposed settlement agreement in May 2006 that were not disclosed to
the U.S. Federal Trade Commission.=94

Normally, cases involving potential criminal prosecutions of
corporations are resolved through deferred-prosecution agreements,
which amount to a form of criminal probation.

Bristol-Myers Squibb is already operating under such a deferred-
prosecution agreement involving accusations unrelated to the Plavix
case. In the separate case, the company was accused of misleading
investors about revenue through an inventory practice often referred
to as =93channel stuffing=94 that made it seem to be selling more product
than it actually was.

The company said yesterday that if it reached the plea deal, the
United States attorney in Newark, Christopher Christie, would close
that deferred-prosecution agreement as scheduled, on June 15,
effectively ending the company=92s period of probation.

The company said it was not clear whether the plea deal announcement
yesterday would affect continuing investigations in the Plavix matter
by the F.T.C. or by the New York State attorney general, Andrew M.
Cuomo.