Tuesday, June 12, 2007

Bristol-Myers-Squibb Pleads Guilty to "Serious Felonies," but Pays a Small Fine

Recently, former White House official "Scooter" Libby was sentenced to two and one half years in prison for lying to federal investigators (as per the Washington Post). But lying to federal investigators doesn't always imply such big penalties, apparently if the one doing the lying is a pharmaceutical company executive. Per the New York Times,

The drug maker Bristol-Myers Squibb pleaded guilty on Monday to making false statements to a federal agency, ending an unusual criminal case involving its blockbuster blood-thinning drug Plavix.

The case involved accusations that the company had entered a secret deal to head off generic competition to Plavix, its biggest-selling product. The investigation began last summer with a search of the company’s Manhattan headquarters by federal agents and it led to the dismissal of the chief executive, Peter R. Dolan.

But the investigation ended with relatively minor charges against the company. During a 30-minute hearing in federal court here, Judge Ricardo M. Urbina fined Bristol-Myers $1 million. The sentence had been worked out beforehand in an agreement between the company and the Justice Department’s antitrust division.

While the company pleaded guilty to making false statements, after the hearing it issued a statement saying that it was merely taking responsibility for the actions of one former executive.

The accusations involved statements reportedly made by Dr. Andrew Bodnar, a former executive of Bristol-Myers. Dr. Bodnar, an adviser to Mr. Dolan, had been given an important assignment last year — settle a patent dispute with the Canadian generic drug maker Apotex.

During settlement negotiations in May 2006, Dr. Bodnar reportedly suggested that Bristol-Myers would not market its own generic version of Plavix.

Under an existing consent decree with the Federal Trade Commission, any such settlement agreement by Bristol-Myers had to be cleared by the agency. But an agreement by Bristol-Myers not to sell its own generic was never disclosed to the F.T.C....

Neither Dr. Bodnar, who is no longer with the company, nor Mr. Dolan has been charged with any wrongdoing.

A Department of Justice press release did state,

According to the two-count criminal charge filed today in the U.S. District Court in Washington, D.C., in 2006, BMS and another company, Apotex Inc., were engaged in litigation over the validity of the patent for Plavix and were negotiating a settlement of that litigation. At the time, BMS was subject to a separate consent decree – for unrelated conduct – with the Federal Trade Commission (FTC) that required BMS to submit any proposed patent settlements for review and approval by the FTC. The FTC warned BMS that it would not approve a settlement of the Plavix litigation if BMS agreed not to launch its own generic version of Plavix that would compete against Apotex for generic sales. After nevertheless entering into such an agreement, BMS concealed it from and then lied about its existence to the FTC. The Department charged BMS with filing two false statements to the FTC as part of its effort to hide part of its agreement with Apotex.

'BMS is charged with both lying to the federal government and with taking steps to conceal its false statement – both serious felonies,' said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division. 'The seriousness of the offenses is compounded by the fact that BMS’ obstructive conduct occurred in connection with the FTC’s review of a proposed patent settlement affecting the cost of a lifesaving drug sold to tens of millions of Americans.'

This story, which has gotten little attention so far in the press, seems to suggest the operation of "defining deviancy down" as applied to dishonest conduct by leaders of health care organizations. Even though it would seem that lying to federal investigators is really a "serious felony," such dishonesty in the health care context seems to generate little overt outrage. This lack of outrage in this particular circumstance is even harder to understand given that BMS is a repeat white collar offender. The company agreed to a deferred prosecution agreement in an unrelated case only two years ago (see post here.) The company reportedly agreed to settle charges it had engaged in deceptive marketing practics in another unrelated case one year ago (see post here.)

Nonetheless, multiple stories of deceptive, dishonest, and sometimes felonious health care leadership cannot help but continue to erode the trust of the public and physicians in the leadership of large health care organizations. And these stories are a likely cause of the pharmaceutical industry's "shifty," reputation in particular (see post here).

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