Healthy Skepticism Library item: 1354
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Landers P.
Bristol-Myers Launches Review Of Sales, Marketing Practices
The Wall Street Journal 2003 Jul 23
Full text:
Bristol-Myers Squibb Co. said it has started an internal review into whether its sales violated federal antikickback laws and drug-pricing rules, dealing the drug maker a setback just as executives were saying the company had turned the corner from an accounting scandal.
Bristol-Myers said the review was begun by senior managers acting on their own initiative. “This is only an internal review that was undertaken by the company for the company,” said a spokeswoman.
Still, the company’s description of its possible violations closely resembles the alleged violations described by other drug makers that are being investigated by federal prosecutors in several regions.
In a news release, Bristol-Myers said it wants to know whether some “of its sales and marketing practices … comply with the provisions of applicable ‘anti-kickback’ laws.” It said the internal review also seeks to determine whether its pricing in federal-government programs that use Medicaid prices as a reference has been appropriate. The release didn’t provide further details.
Several drug makers have been investigated under laws concerning kickbacks and Medicaid-related pricing. Schering-Plough Corp. said in May that the U.S. attorney in Boston has threatened the company with criminal indictment over sales and marketing practices, including possible violations of the antikickback statute. Schering-Plough also faces a federal grand-jury probe in Pennsylvania over Medicaid pricing.
In April, Bayer AG and GlaxoSmithKline PLC agreed to pay a combined $344 million in fines to settle allegations by the U.S. attorney in Boston that the companies avoided reporting to the federal government the low prices they charged to private payers and thus evaded paying millions of dollars in additional rebates to Medicaid.
Bristol-Myers executives briefed the company’s board about the internal inquiry during a board meeting last week, a person familiar with the situation said. Directors learned the company had undertaken the review partly because the drug industry’s practices are being questioned by aggressive prosecutors. Peter Dolan, the chief executive, and finance chief Andrew Bonfield are in charge of the inquiry. The Bristol spokeswoman declined to comment.
Bristol-Myers has been under siege since April 2002 over accounting problems. The company admitted in March that it overstated revenue by $2.5 billion between 1999 and 2001. Bristol-Myers said it improperly recorded sales to wholesalers, generally toward the end of the quarter, in order to meet quarterly sales projections established by senior management. The Securities and Exchange Commission and Justice Department have been investigating the revenue overstatement.
People familiar with the situation said late last year that Mary Jo White, former U.S. attorney in Manhattan, had been hired by Bristol-Myers to conduct an internal investigation into the wholesaler-incentive issue. The company hasn’t disclosed the results of Ms. White’s investigation, but two people familiar with the latest inquiry said Ms. White isn’t involved this time.
Ms. White couldn’t be reached for comment Tuesday night.
Recently, Bristol-Myers executives have begun to talk of a comeback from the accounting scandal, citing early success with Abilify, a drug for schizophrenia, and the Food and Drug Administration’s approval of a new AIDS treatment. James Palmer, head of research and development, told investors at a presentation last month that “things are turning the corner” at the company.
