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April 24, 2003

States and Bristol-Myers Reach "Taxol" Cancer-Drug Antitrust Settlement

States alleged the drug company illegally blocked entry of generic equivalent drugs for the anti-cancer drug "Taxol," which is used to treat breast cancer and other cancers.

Iowa Attorney General Tom Miller and other states filed formal settlement documents today in an antitrust suit brought against Bristol-Myers Squibb Co. regarding the company's cancer-fighting chemotherapy drug, "Taxol."

The settlement plan -- which calls for payment of $55 million by Bristol-Myers -- was filed today with the U.S. Federal District Court for the District of Columbia. If the proposal is approved by Judge Emmet G. Sullivan, a claims administration process will be set in motion for consumers who purchased Taxol or its generic equivalent between Jan. 1, 1999, and February 28, 2003.

Miller said a web site and toll-free number will be established and advertised for consumers to file claims or obtain information, if the settlement is approved as expected. A concerted effort will be made nationally to alert consumers, with print ads in national magazines and broadcast messages. The claim process will run for several months. "We certainly will work hard to inform Iowans about this," Miller said. Specific new information is not expected for some time, but Iowans always can check the Attorney General's web site for updates -

Miller said it is estimated that consumer refund checks could range from less than $100 to about $1500, depending on the circumstances of payment.

Alleged Antitrust Violations:

The states alleged that Bristol-Myers Squibb Co. illegally thwarted entry into the market of lower-priced generic alternatives to Taxol. Taxol originally was developed and tested under the National Cancer Institute's direction at public expense until 1992. Then Bristol-Myers had five years of marketing exclusivity. The states allege the company fraudulently obtained patents for methods of administering the drug that resulted in unlawful maintenance of monopoly and delay of generic alternatives entering the market after 1997. Taxol's efficacy made it a major source of revenue for Bristol-Myers, with annual sales exceeding $1 billion by 1998.

"Drug prices usually drop significantly when generic drugs become available," Miller said. "Thwarting generic drugs illegally harms both consumers and taxpayers, who often pay for prescription drugs subsidized or paid-for by government programs."

The settlement agreement also contains strong injunctive relief for ten years to prevent Bristol-Myers from engaging in anti-competitive conduct in the future.

Taxol is mostly used in clinical hospital settings in periodic infusions lasting from 3 to 24 hours, so it is not purchased by consumers at retail pharmacy outlets. Patients or their third-party payors would ordinarily be billed as part of a bill for chemotherapy.

The Iowa Attorney General's Office and other states have cooperated in several national cases alleging major drug manufacturers thwarted entry of lower-cost generic drugs to the market, resulting in millions of dollars of refunds for consumers and agencies funded by taxpayers.

Payments by Bristol-Myers and Claims Process:

Under the proposed settlement, Bristol-Myers would pay a total of $55 million to the fifty states (and also territories) - $14.5 million for consumer restitution (including about $2 million to administer a nationwide claims process); $37.5 million for government entities; and $3 million to compensate the states for their investigation and litigation costs.

The state entities include state hospitals that purchased the drugs and other state agencies such as Medicaid agencies that purchased or reimbursed for the drugs. The division between consumer restitution and restitution to agencies reflects the fact that, given the high cost of treatment, few consumers have substantial claims for restitution, and most of the cost of treatment for consumers was covered by public or private insurance. Typical infusion treatment likely would cost on the order of $6000, and very few consumers would have means to pay that amount but not have insurance.

Miller said a detailed notice and claims process will begin after the Court gives preliminary approval to the settlement. It has not been fully determined how the $37.5 million to government entities will be allocated among the states.

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