OT - 'Bristol-Myers Agrees to Settle U.S. Investigation'

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http://www.bloomberg.com/apps/news?pid=20601103 & sid=aSsr7J6iOA1w

Bristol-Myers Agrees to Settle U.S. Investigation

By Rapaport

Dec. 21 (Bloomberg) -- Bristol-Myers Squibb Co. agreed to settle

U.S. probes into its drug pricing and marketing practices for $499

million and lowered its 2006 earnings forecast.

The settlement resolves federal charges the company inflated the

average wholesale price of some drugs, Bristol-Myers said in a

statement today. Setting aside funds for the settlement will reduce

2006 profit from continuing operations by 26 percent to 72 to 77

cents a share from 97 cents to $1.02.

U.S. investigators in Massachusetts also were examining promotion of

the Abilify schizophrenia drug and ``other current and divested

products'' for unapproved uses, said Bristol-Myers spokesman

Mac in a telephone interview today. The company last year

settled a previous probe involving allegations it boosted sales by

encouraging distributors to buy more medicine than they could sell.

The latest agreement ``removes an overhang, but the lack of

information makes it difficult for Wall Street to react,'' said Les

Funtleyder, an analyst for Tabak & Co. in New York, in a

telephone interview today. ``The laws around average wholesale

pricing are convoluted, and it's easy for a company to run afoul of

the rules. I don't think Wall Street takes this too seriously.''

Shares of Bristol-Myers rose 17 cents to $25.98 at 10:14 a.m. in New

York Stock Exchange composite trading. The stock has risen 13.8

percent in the last 12 months.

Dolan

As part of last year's agreement, the company removed Chief

Executive Officer Dolan as chairman, paid $300 million to the

government and allowed former U.S. District Judge Frederick Lacey to

monitor its transactions. In September, the company fired Dolan as

CEO on Lacey's urging as a result of an agreement Dolan made to

delay competition on the Plavix heart pill.

Today, the drugmaker boosted its reserves for the latest settlement

by $353 million and said it would record an estimated pretax charge

of $220 million for previously disclosed debt restructuring.

Mc wouldn't identify the other therapies being probed by

regulators.

No criminal charges will be filed as a result of today's preliminary

settlement, the company said. The agreement still must be approved

by the Justice Department, the statement said.

The case stems from the government practice of using so-called

average wholesale prices, as reported by Bristol and other

drugmakers, to set reimbursement rates for medicines used federal

health programs, including Medicare and Medicaid.

Inflated Prices

State attorneys and consumer groups claimed the companies used the

formula to artificially inflate drug prices, costing the government

health programs and private health plans hundreds of millions of

dollars.

GlaxoKline Plc, Europe's biggest drugmaker, agreed in August to

pay about $70 million to settle claims it overcharged U.S.

government health programs by exploiting the formula.

Bristol-Myers has not yet resolved a private class action suit

involving drug prices, Mac said. The private case involves

pricing of 20 drugs, according to a regulatory filing. Mac

declined to comment on which drugs were involved.

To contact the reporter on this story: Rapaport in New York at

Lrapaport1@...

Last Updated: December 21, 2006 10:21 EST