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States sue Bristol-Myers Squibb
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December 12, 2001: 2:18 p.m. ET
Lawsuit alleges drug company kept generics from hitting the market.
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NEW YORK (CNN/Money) - More than two dozen states have sued Bristol-Myers Squibb for allegedly making inaccurate statements to federal regulators, keeping a cheaper generic version of its anti-anxiety drug BuSpar off the market.
The lawsuit, filed by 28 states and Puerto Rico, claims that New York-based violated antitrust, consumer protection and unfair competition laws, the Pennsylvania attorney general's office said in a statement.
"In Pennsylvania, this alleged illegal activity forced consumers and government agencies to pay much higher prices for the brand-name, anti-anxiety drug," Pennsylvania Attorney General Mike Fisher said in the statement. "It appears Bristol-Myers Squibb attempted to manipulate federal drug regulations to extend the patent and continue its monopoly on the product."
Bristol-Myers Squibb (BMY: down $3.30 to $50.45, Research, Estimates) stock tumbled on the news. Officials of the New York-based drugmaker were not immediately available for comment. Last year, BuSpar's sales were about $700 million, according to the suit.
Investigators said the company knowingly provided inaccurate information that stopped the Food and Drug Administration's approval process for several generic forms of BuSpar - keeping the competitive products from the market for about four months.
"It's simply a violation ... to try to mislead regulators at the federal level in an effort to keep generic drugs, which are typically 25 percent cheaper, off the market," Texas Attorney General John Cornyn told CNNfn. "If they can delay competition for generic drugs they can reap a lot of gain as a result. We wouldn't file a lawsuit if we didn't think there was a merit to it."
Industry analysts said the suit may not hurt Bristol-Myers' profits but could put pressure on the stock.
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"(The lawsuit) is probably more impactful to the psychology surrounding Bristol," said Tim Anderson, drug analyst with Prudential Securities. "It's probably not materially impactful to the company, but you certainly don't need another bit of bad news for this name."
"In the long term, Bristol is not going to grow by having a novelist approach to their legal strategy," said Bob King, an analyst with Edward Jones.
The suit, filed in New York, seeks millions of dollars to be paid back to consumers. 
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