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August 7, 2002

State Sues Bristol-Myers Squibb Alleging Antitrust Violations in Prescriptions

Suit alleges company took illegal action preventing consumers and taxpayers from benefitting from generic versions of one of its lucrative, brand-name drugs.

DES MOINES. Attorney General Tom Miller announced Wednesday that Iowa is joining other states in suing Bristol-Myers Squibb Co., alleging that the drug company illegally delayed a generic version of the company's lucrative anti-anxiety drug, BuSpar, from coming to market, forcing consumers, businesses, and taxpayers to pay higher prices for the drug.

"The States allege that Bristol-Myers Squibb engaged in fraud to unlawfully maintain its monopoly for the drug and its exclusive hold on the market," Miller said. "We allege that Bristol-Myers made false statements to the Food & Drug Administration about its patent in an effort to stop competitors from selling cheaper generic alternatives and unlawfully maintain its monopoly."

Miller said Iowa and Oklahoma are joining 29 other states that filed the suit last December. He said an Iowa Supreme Court ruling this spring makes it much more likely that Iowa can recover significant restitution from the company. "Now we have a much better cause of action to seek compensation for higher costs paid by taxpayers," he said. Taxpayers often have to pick up the tab for prescription drugs whose cost is paid or subsidized by government programs aiding low-income persons.

The suit notes that Bristol-Myers had over $700 million in BuSpar sales in 2000. It alleges the company made fraudulent claims to the FDA about a patented method of using the drug, for the purpose of forestalling competition from generic drug makers. Drug makers are permitted exclusive marketing of new drugs for some years, but patents ordinarily expire and generics enter the market.

"When generic drugs become available, they usually reduce prices sharply," Miller said. A new generic drug often sells for about 70% of the price of its brand-name counterpart, and as additional generics become available the generic price may fall to about 30% of the price for the brand-name drug. Furthermore, generic versions typically quickly capture a large share of the prescriptions, lowering costs to consumers, businesses, and government agencies.

"Prescription drugs are a huge business -- and a huge expense for consumers and taxpayers," Miller said. "Companies need to play by the rules. That makes a level playing field for all businesses, and it protects consumers and taxpayers."

The suit seeks an injunction to bar future violations, civil penalties, damages suffered by the Medicaid program and other state agencies that purchased the drugs, and disgorgement of profits obtained illegally by Bristol-Myers. The states will seek to recover reimbursements for consumers.

The suit notes that Bristol-Myers Squibb's total net sales worldwide for 2000 were over $18 billion. Bristol-Myers is a Delaware corporation with its principal place of business in New York City.

"This drug and many others are used heavily by older persons," Miller said. "High drug costs are a huge concern for consumers and taxpayers alike."

Miller said the states are considering action in other prescription drug cases, including regarding illegal efforts to block competition from generic alternatives to brand-name drugs.

In another lawsuit still pending, Iowa and 26 other states alleged that Hoechst company paid another company about $90 million to keep a lower-priced generic version of a popular heart medication, "Cardizem CD," off the market. Cardizem CD is considered a highly-effective medication for high blood pressure, chest pains and heart disease.

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