In another stirring chapter of the on-going Plavix debacle, the Bristol-Myers Squibb [1] pleaded guilty to two criminal counts of two violations of the federal False Statements Act and will pay a $1 million fine (the maximum penalty) for lying to the federal government about a patent deal involving the anticoagulant drug Plavix (clopidogrel bisulfate [2]).
The Department of Justice claimed that Bristol-Myers acted to supress competition for Plavix that could have reduced the cost the drug. In 2006, Bristol-Myers and Apotex were in litigation over the validity of the patent for Plavix and were negotiating a settlement of that litigation. However, at the same time, Bristol-Myers was subject to a separate consent decree for unrelated conduct with the Federal Trade Commission [3] that required it to submit any proposed patent settlements for review and approval by the FTC.
The FTC warned Bristol-Myers that it would not approve a settlement of the Plavix litigation if the company agreed not to launch its own generic version of Plavix that would compete against Apotex for generic sales.
Bristol-Myers wanted to protect its patent and struck a deal with Apotex to refrain from selling generic Plavix in the U.S. until mid-2011. But the proposed deal was rejected by state regulators in the U.S., leading Apotex to sell generic Plavix in August 2006 [4]. A federal judge issued a injuction three weeks later.
After entering into the agreement, Bristol-Myers allegedly concealed it from and then lied about its existence to the FTC. The Department of Justice charged Bristol-Myers with filing two false statements to the FTC as part of its effort to hide part of its agreement with Apotex.
The plea remains subject to a judge’s approval, and authorities continue to investigate the deal. At the same time, the injunction against Apotex remains in place while a federal judge decides a patent-infringement claim against.
The FTC has challenged similar arrangements, arguing that they are anti-competitive and hurt consumers, and asked the Supreme Court to hear a case involving Schering-Plough in which a similar deal was struck. Although the Supreme Court declined to take on that case [5], the FTC has signalled that it will continue to strike down deals between big drug companies and generic manufacturers that involve so-called “reverse payments”.
Meanwhile, Sanofi-Aventis SA was last seen acting like it doesn’t know Bristol-Myers [6].