Bristol-Myers Squibb to Pay $670 Million to Settle Lawsuits

By MELODY PETERSEN

NY Times, January 8, 2003

Bristol-Myers Squibb said yesterday that it had agreed to pay $670 million to settle numerous lawsuits by states, consumers and competitors charging it with using illegal tactics to keep lower-priced versions of its medicines Taxol and BuSpar out of the market.

The drug company said final details of the settlement were still being negotiated with the state attorneys general and other parties who filed suit. The terms are subject to approval by the courts where the lawsuits were filed.

The announcement, however, is an important step toward resolving the many lawsuits filed against Bristol after it tried to stop companies from selling lower-priced generic versions of BuSpar, an antianxiety medicine, and Taxol, a cancer drug. Both drugs are now available as generic medicines, but the lawsuits claim that patients were deprived of the lower-priced medicines for many months because of Bristol's actions.

The New York attorney general, Eliot Spitzer, said that the high cost of the settlement should send a message to the entire pharmaceutical industry that actions like Bristol's would not be tolerated. New York was part of a coalition of states whose attorneys general filed the lawsuits on behalf of consumers and state Medicaid programs.

"We're going to continue to be very aggressive," Mr. Spitzer said.

Under the agreement, Bristol said it planned to pay $535 million to resolve the BuSpar litigation and another $135 million to settle claims relating to Taxol.

In a statement, Bristol said that it believed that the actions it had taken to protect its rights to the two drugs were "entirely lawful." The company said it agreed to settle to put the uncertainty and risk of litigation behind it.

The settlement does not end investigations by the Federal Trade Commission into whether Bristol took illegal steps to try to keep generic versions of BuSpar and Taxol off the market. "We're continuing to have discussions with the F.T.C.," said Robert F. Laverty, a spokesman for Bristol.

Mr. Spitzer said Bristol and the plaintiffs in the suits were negotiating terms aimed at preventing Bristol from taking similar actions to delay generic competitors in the future.

The lawsuits involving BuSpar and Taxol revolved around secondary patents that Bristol filed with the Food and Drug Administration that worked to delay the sale of the generics.

Just 12 hours before the patent on BuSpar was to expire in November 2000, and as Mylan Laboratories was loading trucks with its generic version of the drug, the United States Patent Office issued a new patent to Bristol, which it immediately filed with the F.D.A. to stop the shipments.

The states and other parties argued that the second BuSpar patent, which covered a chemical substance made in the body after a patient swallows the drug, was not valid and that Bristol had used fraud to get the F.D.A. to accept it.

Neither Mylan Laboratories nor another generic manufacturer was able to sell buspirone, the generic name for BuSpar, until four months later. In that time, Bristol earned tens of millions of dollars from the drug's sales.

In the case of Taxol, the lawsuits contend that Bristol's illegal actions denied patients and state governments access to a lower-priced version of the cancer medicine from December 1997 to April 2001.

The lawsuits claim in part that Bristol illegally colluded with a smaller drug company, American BioScience, to get another patent on the drug filed at the F.D.A., which stalled the sale of the generic medicine.

Taxol was discovered by the taxpayer-financed National Cancer Institute. The government gave Bristol the rights to continue with development and to sell the drug.

Other drug companies have also filed for secondary patents on products and tried to use loopholes in federal law to extend the time they have to sell a product exclusively.

For example, in the late 1990's, Warner-Lambert filed additional patents covering Neurontin, an epilepsy drug, which have succeeded in keeping generic makers from selling the medicine even though its primary patent expired in 2000. Pfizer, which now owns Warner-Lambert, says the patents are valid.

The amount of money involved in such cases is often substantial.

Before generic companies began selling Taxol, Bristol was earning roughly $3 million a day from the medicine. Prices for the first generic drug on the market are often 30 percent below the price of the brand-name drug. Prices fall even more as other manufacturers begin selling the generic.

Yesterday, Senators Charles E. Schumer, Democrat of New York, and John McCain, Republican of Arizona, reintroduced legislation aimed at closing loopholes in the law that the drug companies have used to keep lower-price medicines off shelves. That legislation overwhelmingly passed the Senate last year, but Republican leaders in the House of Representatives refused to bring it up for a vote.