An Issue of "Corporate Culture?" - FBI Raids Bristol-Myers-Squibb

The pharmaceutical company Bristol-Myers-Squibb has been the subject of a few previous posts on Health Care Renewal.

The company is currently operating under a deferred prosecution agreement arising from federal charges that BMS inflated sales figures reported to investors (see post here). We also posted about the games that may have been played with data on the company's new drug for diabetes, muraglitazar.

Now, as reported in the New York Times (and elsewhere), the company is the subject of a new criminal investigation "into a proposed patent settlement involving the company’s biggest-selling product, the blood-thinning medication Plavix. Bristol-Myers markets the drug with the French company Sanofi-Aventis. Yesterday, a coalition of 56 state and territorial attorneys general rejected a proposed settlement, which was supposed to have ended the patent dispute with Apotex, a Canadian company that wants to market a generic copy of Plavix." The day before, the Times reported that "federal agents, armed with subpoenas, searched two offices Wednesday at the headquarters of Bristol-Myers on Park Avenue in Manhattan, including the office of the chief executive, Peter R. Dolan." The questionable aspect of the settlement appears to involve "a payment to Apotex and an agreement that the company not sell its generic version until September 2011, eight months before the United States patent for Plavix was set to expire."

[We posted about questions surrounding clinical studies of Sanofi-Aventis' antibiotic Ketek here. Apotex is the Canadian generic pharmaceutical manufacturer accused of trying to discredit University of Toronto researcher Dr Nancy Olivieri after she voiced her concerns about the adverse effects of its drug defiripone (see post here).]

The FBI raid did not seem to worry the chair of the BMS board of directors, James D Robinson III: “Peter has done a superb job in turning around the company, from developing a new management team, to a pipeline considered to be one of the best in the industry, to the recent approvals which bring innovative new medicines to patients in need,” he said. “He has the full and complete confidence of the board. We believe the actions of all Bristol-Myers Squibb employees, including Peter, involved in this matter have been appropriate, and have been coordinated hand-in-hand with senior outside counsel at every step.”

On the other hand,

Critics of the company’s management and board have said that the latest criminal investigation indicates that the corporate culture of Bristol-Myers has not changed since it was accused of a practice called channel stuffing that involves inflating sales through inventory manipulation, forcing Mr. Dolan to restate earnings by $2.5 billion for the period 1999 to 2001.

Thomas Dubbs, a Manhattan lawyer who sued the company over an aborted drug called Vanlev, called the newest investigation, 'yet another example of the Bristol-Myers board apparently being asleep at the switch.' [Editorial note: despite the fact that the BMS board includes Harvard Professors of Medicine and Public Health, and of Molecular and Cell Biology.]

'One would think that after channel stuffing and the Vanlev debacles,' Mr. Dubbs said, 'they would be paying more attention to whether senior management is playing by the rules.'

The lawsuit by Mr. Dubbs, which the company settled this year for $185 million, contended that Bristol-Myers made unduly rosy statements about Vanlev, a drug for high blood pressure, stirring investor interest in the company even though officials knew it caused a dangerous swelling condition called angioedema.

Given just how often some big health care organizations find themselves splashed across newspaper pages for one questionable practice after another, and now how often organizations that have gotten noticed for the wrong reasons find themselves linked to each other, the issue of corporate culture becomes particularly acute. How many bad headlines in the business sections will it take to get these cultures to change? And when will the stories in the business sections finally leak into the medical and health care press, so that physicians will realize what sort of organizations they must work with?