Controversial Big Pharma-Generic Deals Now More Controversial

FBI agents searched the Manhattan office of Bristol-Myers Squibb CEO Peter Dolan as part of a criminal investigation into an agreement the drug company struck to delay the launch of a generic version of blood-thinning drug Plavix, its best-selling product. Here are stories from the NYT and WSJ.

The investigation concerns a March deal struck by Bristol-Myers and Sanofi with generic-drug maker Apotex to settle litigation. (Sanofi markets Plavix outside the U.S.) Apotex had filed a patent infringement lawsuit against Bristol-Myers, challenging its Plavix patents. Bristol-Myers and Sanofi-Aventis reached an agreement with Apotex allowing the two companies to continue selling the drug until 2011 without competition from Apotex. They also planned to pay Apotex a minimum of $40 million and Apotex would drop its litigation.

The legality of these controversial deals between Big Pharma and their generic competitors has become a lightening rod issue inside the Beltway. (For earlier Law Blog posts on the issue, click here and here.) The FTC has said these Big Pharma agreements with low-cost generics are anti-competitive — essentially, they’re payoffs that stymie competition and hurt consumers. It asked the Supreme Court to review a similar deal between Schering Plough and generic rival, to no avail.

Bristol-Myers’s CEO said yesterday there was nothing illegal about the agreement and said the company was cooperating with the investigation.