The lawsuit is the latest to hit the company, which agreed to a $300 million settlement in a shareholder lawsuit only last week. The latest investigation still has a criminal probe involving executives still pending.
Bristol-Myers agreed to pay a civil fine of $100 million along with an additional $50 million payment into a fund for the benefit of shareholders. The company did not admit or deny any liability, but agreed not to violate future provisions of the Federal securities law.
BMS stood accused of overstating revenue for 1999-2001 by $2.5 billion as a result having given wholesalers deep discounts to buy more prescription medicines than they could sell. The United States Securities and Exchange Commission (SEC) alleged the company sold drugs to wholesalers and improperly stated revenue from $1.5 billion of those sales to its two biggest wholesalers.
The SEC said in the suit that Bristol-Myers allegedly covered the wholesalers' costs and guaranteed returns on investment until they sold the products. In booking the $1.5 billion in revenue at the point of shipment gave investors an inaccurate representation of a company's financial status.
Bristol-Myers also agreed in the settlement to regulate accounting practices, financial reporting and internal controls by appointing an independent adviser.
These recent events have cast a shadow over the healthy pipeline of drugs the company was to showcase. Between now and the end of 2005, the company were preparing the launch of three new drugs: a pill for rheumatoid arthritis, a new diabetes treatment, and an antiviral drug for human papillomavirus infection.
Like the rest of the drug sector, BMS's big-selling products are losing patent protection, and in the near term, there won't be any replacements to bring in the kind of lost revenue when the drugs go generic. It is estimated that Bristol-Myers will lose between $1.1 billion and $1.3 billion in revenues annually through 2007 as a result of patent expirations.
In 2004 alone, its diabetic drugs Glucophage and Glucovance, which made $819 million last year will lose patent protection. The same will happen to the cancer drug Paraplatin, which brought in $905 million in 2003. Bristol-Myers will lose patent protection in 2006 on its biggest-selling drug, the cholesterol-lowering drug Pravachol, along with the $2.8 billion it made in revenue.