Bristol Myers Squibb Agrees to Pay $499 Million

Can you imagine how much money these pharmaceutical companies make that they rather pay a huge wad of money than lower the prices in the first place?

Bristol-Myers Squibb Co. offered to pay $499 million to settle federal investigations into whether the company played a role in a pricing scheme that led insurers and government agencies to overpay for drugs. The company reduced its profit forecast to reflect the charges.

The New York-based drug maker entered an agreement in principle with the Justice Department and the U.S. Attorney in Massachusetts to pay the settlement and avoid civil and criminal charges.

Attorneys general of several states and a number of counties in New York charged that Bristol-Myers Squibb and several other drug companies caused the reported average wholesale prices of their drugs to be inflated - leading government programs and insurers to overpay since reimbursement rates were based on those lists. All the lawsuits were consolidated under the federal district court in Massachusetts.

Bristol-Myers Squibb products on the wholesale price list included the blood thinner Plavix - its best-selling drug - along with blood-pressure drug Avapro; cancer treatment, Taxol; and the cholesterol-lowering drug Pravachol. The company booked sales of $19.21 billion in 2005.