States File Antitrust Lawsuit against Bristol-Myers Squibb Over Generic Drug Delays

Attorneys general from 29 states and Puerto Rico filed a federal antitrust lawsuit yesterday against Bristol-Myers Squibb Co., alleging that the drug maker illegally prevented generic versions of its anti-anxiety drug BuSpar from entering the market, the Newark Star-Ledger reports. The lawsuit, filed in U.S. District Court in New York, contends that the company "cheated state agencies and consumers out of millions of dollars" they would have saved by purchasing generic alternatives (Silverman, Newark Star-Ledger, 12/13). The dispute began in November 2000, when Bristol-Myers received a patent on a drug created in patients' bodies when they swallow BuSpar -- 11 hours before generic versions were scheduled to be shipped by Mylan Laboratories. The FDA then placed approval of the generics on hold. Mylan successfully sued Bristol-Myers, as a federal judge in March ordered Bristol-Myers to withdraw its new patent and told the FDA to approve BuSpar's generic competition. A federal appeals court, however, overturned this decision in October, saying the judge did not have the power to compel the FDA to approve the generic.

The new lawsuit alleges that Bristol-Myers made "false statements" to the FDA in November 2000 about the new BuSpar patent (Appleby, USA Today, 12/13). "This alleged illegal activity forced consumers and government agencies to pay much higher prices for the brand-name, anti-anxiety drug," Pennsylvania Attorney General Mike Fisher said in a statement, adding, "It appears Bristol-Myers Squibb attempted to manipulate federal drug regulations to extend the patent and continue its monopoly on the product" (Newark Star-Ledger, 12/13). The attorneys general want the company to drop attempts to block generics and refund them a portion of the millions they spent on BuSpar (USA Today, 12/13). Sales of the drug exceeded $700 million last year (Los Angeles Times, 12/13). While it is unclear how much states would have saved on the generic version between the November FDA decision and the March court ruling if Bristol-Myers had not filed for the new patent, Pennsylvania spent $3.5 million on the drug in this period, while New York spent $7 million for Medicaid beneficiaries. After the March ruling, BuSpar sales dropped to $28 million in the third quarter. Bristol-Myers did not comment on the lawsuit (Newark Star-Ledger, 12/13). Several consumer groups and pharmacies have also filed lawsuits against Bristol-Myers over the November 2000 BuSpar patent extension (USA Today, 12/13).

The announcement of the lawsuit adds to an already bad month for Bristol-Myers, the Wall Street Journal reports. Despite a big lobbying effort, it now appears that Congress will not extend the patent for its blockbuster diabetes drug Glucophage, which generates about $3 billion in annual sales. The Senate yesterday voted to close a loophole that would have given Glucophage an additional three years of protection based on the company's testing of the drug in children. Bristol-Myers' stock dropped 6.1% yesterday to close at $50.45, and several Wall Street analysts expect the company to issue lower earnings guidance "soon." The Journal reports that the "simultaneous threats from federal and state authorities underscore the vulnerability of even the largest companies in the pharmaceuticals sector to the increasingly aggressive moves by government officials to reign in industry practices that prop up drug prices" (Hensley/Caffrey, Wall Street Journal, 12/13).