July 28, 2006
FBI agents raided the office of Bristol-Myers Squibb Co. CEO Peter Dolan, as the Justice Department opened a criminal investigation into the company's deal to delay the launch of a generic version of its best-selling drug, Plavix.
The company is allegedly paying a Canadian company not to produce a a drug similar to Plavix. BMS confirms that it is the target of a Justice Department probe, which will determine whether laws have been broken. It provided no other details.
The unique circumstances revolve around the patents that BMS and its partner Sanofi hold on Plavix. Canadian drug maker Apotex is challenging those patents and was poised to launch its copycat version of Plavix in the next few months.
Earlier this year BMS and Apotex reportedly agreed on a deal for Apotex to suspend its legal challenge to the Plavix patents.
In return, it would receive permission to launch its generic version of Plavix a few months before the patents expired. For the agreement, Apotex would receive a cash payment from BMS.
At first the Federal Trade Commission objected to the terms, forcing the two sides to renegotiate portions of the agreement. Consumer advocates, however, were outraged at the deal, saying it's illegal and will end up keeping drug prices high.
The Justice Department investigation will determine whether the deal, is in fact, legal or not.
If it finds that it is not, industry analysts say it will be a significant blow against large drug makers, who have seen small generic competitors make significant legal inroads against patent protections in recent years.
These same analysts say, however, that striking down the deal would continue a trend that has resulted in steadily lower drug prices for insurers and government.
Plavix, a blood-thinner, is BMS's most profitable drug. It produced $2.1 billion in revenue in the first six months of this year.
