Bristol-Myers to Pay $2.1 Million Fine from Efforts
to Protect Plavic from Generic Drug
Company failed to tell Federal Trade Commission of
agreement with generic-maker; millions of senior citizens use this
blood-thinner
March
31, 2009 – One of the hallmark battles in efforts to bring more generic
drugs to market has ended with a $2.1 million fine – the largest allowed
by law – of Bristol-Meyers Squibb Company. BMS was fined for failing to
tell the Federal Trade Commission of agreements with Apotex, Inc.,
regarding potential generic competition to its blockbuster
blood-thinning drug Plavix.
Plavix, with sales in the billions of dollars
($1.47 billion in the last quarter of 2008) is one of the top selling
drugs in the world and used by millions of senior citizens to inhibit
blood clots in coronary artery disease, peripheral vascular disease, and
cerebrovascular disease.
The complaint alleges that BMS failed to disclose
that, as part of a patent settlement in which Apotex agreed not to
launch its generic version of Plavix for several years, BMS also orally
stated, among other things, that it would not compete with Apotex during
the first 180 days after Apotex did market its new generic drug.
BMS’s conduct violated a 2003 FTC Order and the
Medicare Modernization Act, which requires that certain drug company
agreements be accurately reported to both the Commission and the U.S.
Department of Justice (DOJ).
The Commission’s complaint and Order announced
today stem from a 2003 FTC Order settling charges that BMS had entered
into agreements with potential generic drug manufacturers to delay their
entry into the market, in exchange for payments from BMS. The 2003 Order
required BMS to submit certain future drug settlement agreements to the
FTC for review. The Medicare Modernization Act also requires that
certain drug agreements be filed with both the FTC and the DOJ.
In May 2007, BMS paid $1 million to settle a
criminal complaint brought by the DOJ that it had lied to the agency
about its Plavix agreement with Apotex, and the company also has settled
several related state actions.
In filing its complaint, the first-ever brought for
violations of the Medicare Modernization Act reporting requirements, the
Commission stressed that the primary goal of the Act is to ensure that
parties provide a complete description of the agreements they are
reporting. The Medicare Modernization Act requires that unwritten
understandings be described in writing and provided to the Commission
along with written agreements.
“The FTC takes seriously the knowing failure of any
company to comply with Commission Orders,” said Acting Bureau of
Competition Director David P. Wales. “Firms submitting required filings
with the FTC have an absolute obligation to be forthright and complete.”
“The material omission in this case went to the very core of the FTC’s
concerns. Filing firms must understand that they can’t reach oral
understandings and simply omit them from their required MMA filings,”
Wales continued. “Otherwise, the very goal of the MMA would be
undermined. This case, and the significant civil penalty BMS is required
to pay, should serve as an important reminder of that.”
Case Background. In 2006 BMS proposed to resolve a
patent dispute with Apotex Inc., involving Apotex’s efforts to introduce
a generic version of BMS’s blockbuster drug Plavix. As required by the
FTC’s Order, BMS submitted the proposed agreement to the FTC and filed
it in accordance with the Medicare Modernization Act as well, as did
Apotex. While reviewing the proposal, FTC identified a provision in
which BMS agreed not to launch an “authorized generic” version of Plavix
for six months, while Apotex would be the exclusive seller of the
generic version of the drug. BMS’s agreement not to launch an authorized
generic could be worth a significant amount to Apotex because it would
make Apotex’s product the only generic available during those first 180
days.
When questioned by the Commission, BMS withdrew its
filing, renegotiated its deal with Apotex, and refiled the revised
agreement with the agency. In its revised filing, BMS did not disclose
that it had indicated to Apotex that it would, in fact, not launch an
authorized generic.
When Apotex refiled the revised agreement with the
Commission, it stated in a cover letter that BMS had made certain oral
representations in addition to the written agreement, including, among
other things, the discussion about not launching an authorized generic.
At that point, the FTC’s staff requested BMS to certify under oath that
the filed agreement represented the totality of the understandings
between the parties. BMS did, and Apotex separately submitted additional
exhibits and declarations consistent with its earlier position.
Faced with these conflicting certified statements,
the FTC alerted the DOJ’s Antitrust Division, which convened a grand
jury to investigate. Ultimately, on June 11, 2007, BMS entered a plea of
guilty to two counts of perjury for, among other things, failing to
disclose that it had indicated to Apotex that it would not launch an
authorized generic. BMS subsequently paid $1 million in criminal fines,
the maximum amount for the two counts.
While BMS’s guilty plea to DOJ’s criminal charges
was not a required piece of the FTC’s case against the company, it
removed any question about whether the firm could be held accountable
for violating both the original FTC Order and the requirements of the
law. Accordingly, the FTC demanded that BMS address its civil violations
as well.
The $2.1 million civil penalty announced today
represents the total statutory penalty available for BMS’s civil
violations during the period of its most culpable conduct – when it
allowed its proposed settlement agreement to remain “open” for review at
the FTC and pending under the Medicare Modernization Act, despite
failing to include the critical fact that it had made oral
representations to Apotex that were contrary to the written agreement.
The Commission vote approving the complaint and
consent Order in settlement of the court action was 4-0. It was filed in
the U.S. District Court for the District of Columbia on March 26, 2009.
The Commission says it authorizes the filing of a
complaint when it has “reason to believe” that the law has been or is
being violated, and it appears to the Commission that a proceeding is in
the public interest. The complaint is not a finding or ruling that the
defendants actually have violated the law.
Stipulated final judgments and orders are for
settlement purposes only and do not constitute an admission by the
defendants of a law violation. Consent judgments have the force of law
when signed by the judge.
Copies of the documents related to this matter are available from
the FTC's web site at
http://www.ftc.gov and the FTC's Consumer Response Center, Room 130,
600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of
Competition works with the Bureau of Economics to investigate alleged
anticompetitive business practices and, when appropriate, recommends
that the Commission take law enforcement action. To inform the Bureau
about particular business practices, call 202-326-3300, send an e-mail
to
antitrust@ftc.gov, or write to the Office of Policy and
Coordination, Room 394, Bureau of Competition, Federal Trade Commission,
600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about
the Bureau of Competition, read “Competition Counts” at
http://www.ftc.gov/competitioncounts.
About Clopidogrel at Wikipedia
Plavix is marketed worldwide in nearly 110
countries, with sales of $5.9 billion in 2005. It had been the 2nd top
selling drug in the world for a few years as of 2007 and was still
growing by over 20% in 2007.
In 2006, generic clopidogrel was briefly marketed
by
Apotex, a
Canadian generic
pharmaceutical company before a court order halted further
production until resolution of a patent infringement case brought by
Bristol-Myers Squibb. The court ruled that Bristol-Myers Squibb's
patent was valid and provided protection until November 2011.
Generic clopidogrel is also produced by several
pharmaceutical companies in India at significantly lower retail prices,
up to 1/30th of the price.
Counterfeit Plavix is in circulation, as with many
popular medicines.
March
31, 2009 – One of the hallmark battles in efforts to bring more generic
drugs to market has ended with a $2.1 million fine – the largest allowed
by law – of Bristol-Meyers Squibb Company. BMS was fined for failing to
tell the Federal Trade Commission of agreements with Apotex, Inc.,
regarding potential generic competition to its blockbuster
blood-thinning drug Plavix. 