Bristol-Myers Squibb Announces $499M Federal Settlement
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).
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).