Drug Executive Is Indicted on Secret Deal

http://www.nytimes.com/2008/04/24/business/24bristol.html?_r=2&ref=health&oref=slogin&oref=slogin

Published: April 24, 2008
A former senior vice president at Bristol-Myers Squibb has been indicted on federal charges of negotiating a secret pact between the company and a generic drug maker and then hiding the deal from federal regulators.
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Mel Evans/Associated Press

The lawyer for Andrew G. Bodnar, a former Bristol-Myers senior vice president, said he would plead not guilty.

The indictment, filed Wednesday in Washington, charged that Andrew G. Bodnar, a doctor, had made a false statement to the Federal Trade Commission in describing a 2006 agreement between Bristol-Myers and Apotex, a Canadian maker of generic drugs. Dr. Bodnar had led negotiations to stop Apotex from selling its own version of Plavix, a blood thinner that is Bristol-Myers’s top-selling drug.

Dr. Bodnar would not comment on Wednesday, but his lawyer, Elkan Abramowitz, said he would plead not guilty. “All I can say is that we will vigorously contest these charges; we think they are baseless,” Mr. Abramowitz said.

Bristol-Myers pleaded guilty to charges in the case last June, and the company paid a $1 million fine.

A spokeswoman for Bristol-Myers, Laura Hortas, said Wednesday that the company would not comment on Dr. Bodnar’s indictment. If convicted on the single charge, Dr. Bodnar, 60, could face penalties of up to five years in prison and a fine of up to $250,000.

The indictment stems from a federal investigation that led, in part, to the ouster of the previous Bristol-Myers chief executive, Peter R. Dolan, in September 2006.

Earlier that year, Apotex was threatening to sell its own generic version of Plavix before expiration of a patent that gave Bristol-Myers and its partner, Sanofi-Aventis, exclusive rights to the brand-name drug until 2011. The threat by Apotex, which had filed a lawsuit challenging the validity of that patent, was viewed as a serious problem for Bristol-Myers. In 2005, Plavix generated about $3.5 billion in United States sales.

Mr. Dolan dispatched Dr. Bodnar to Toronto to negotiate a settlement. During those meetings, in May 2006, the indictment charges, Dr. Bodnar made secret assurances to Apotex that Bristol-Myers would not issue its own generic version of the drug to compete with Apotex.

At the time, Bristol was bound by a federal consent order requiring it to submit such agreements to the Federal Trade Commission for clearance. The F.T.C. would have been looking for any deals that restrained competition and led to higher prices.

According to the indictment, Bristol-Myers never disclosed that part of the Apotex agreement to the F.T.C. And the indictment contends that after the investigation had begun, Dr. Bodnar certified to the F.T.C. that there had been no such secret deal.

In a letter to employees at the time of its guilty plea last year, the company said it had never entered into a secret deal but was taking responsibility for the actions of a former senior executive. Although that was an apparent reference to Dr. Bodnar, the letter did not name him.

After the negotiations with Apotex broke down, the Canadian company briefly distributed its generic drug in the summer of 2006, causing Plavix’s sales to plummet.

A United States district judge, Sidney H. Stein, ordered Apotex to stop selling its drugs, but not until it had flooded the market with a six-month supply, depressing Bristol-Myers sales by more than $1 billion. Last June Judge Stein issued another order upholding the patent on Plavix. Apotex is appealing that ruling.

Plavix sales recovered in 2007, when Bristol-Myers reported sales of $4.06 billion for the drug in the United States.