Spitzer Announces Tentative Agreements On Damages With Bristol-myers Squibb Co. In Drug Cases

New York Attorney General Spitzer today announced that agreements in principle have been reached with Bristol-Myers Squibb Co. to settle the damage claims in two federal antitrust lawsuits brought by New York and other states involving Bristol's drugs - BuSpar, an anti-anxiety drug and Taxol, which is used to fight cancer. The settlements are expected to total between $135 and $145 million for state purchasers, principally consumers and Medicaid.

In two separate actions, New York and other states charged Bristol with unlawfully blocking the market entry of cheaper generic alternatives to both drugs. In the BuSpar case, New York and other states will receive between $90 and $100 million, depending on the number of states participating. In the Taxol case, Bristol-Myers will pay the states $55 million.

The parties' agreement is subject to the negotiation of other settlement terms, including provisions that would address related market practices engaged in by Bristol. The settlements also are subject to approval by the two courts where the actions are pending. The negotiations with Bristol are continuing.

"While we still have some work to do to finally resolve these cases, this preliminary accord represents an important step toward compensating consumers and deterring wrongdoing," Spitzer said. "The spiraling costs of prescription drugs is of major concern for New Yorkers and across the nation, and the availability of generic versions of major drugs helps lower the financial burden on consumers and taxpayers alike. I have pledged to combat violations of the antitrust laws, especially those that victimize the people who can least afford to pay inflated prices, such as senior citizens."

BuSpar, the brand name of buspirone hydrochloride, is a widely prescribed drug used to treat anxiety. In a complaint filed in December of 2001, Spitzer alleged that Bristol violated federal and state antitrust laws by illegally obtaining a new patent extending BuSpar's exclusive hold on the market. The complaint further alleged that Bristol knowingly made false statements to the FDA concerning the scope of its new patent as part of a scheme to extend its patent monopoly over BuSpar, thereby preventing competition from less expensive generic drugs.

Taxol is not purchased directly by consumers, but is administered by physicians and hospitals to patients suffering from breast, ovarian, and other cancers. A course of treatment based on Taxol frequently costs from $6000 to $10,000; the cost of a dose of the branded medication is approximately $1,625, while the same dosage marketed by a generic company may cost $1,200. In a suit filed in federal court in Washington, D.C., Spitzer and other state attorneys general alleged that Bristol, despite assurances given in congressional hearings that Taxol was unpatentable and would enjoy no more than five years of marketing exclusivity, illegally obtained patents, which the company misused to block generic competitors from marketing competing drugs.

In the BuSpar case, a total of 35 states, the District of Columbia, and Puerto Rico joined in the litigation and the preliminary agreement. New York is one of the leaders of the multistate group. In the Taxol case, 38 States, the District of Columbia, and three territories are participating. New York was one of a group of states leading the investigation that led to the filing of the federal court action.

The matter is being handled by Assistant Attorneys General Richard L. Schwartz and John A. Ioannou, and the Antitrust Bureau's Director of Economics Hampton Finer.