NEW YORK (CNN/Money) - The attorneys general of 29 states, the District of Columbia, Puerto Rico and the Virgin Islands sued Bristol-Myers Squibb Co. Tuesday, alleging the drugmaker illegally maintained a monopoly on its cancer treatment Taxol.

The states claim Bristol fraudulently obtained patents on Taxol, which contains the naturally occurring substance paclitaxel, and listed them with the U.S. Food and Drug Administration. The suit also alleges Bristol brought baseless lawsuits against companies making generic forms of Taxol.

The FDA approved Taxol in 1992 and with that approval came a five-year exclusive marketing right for Bristol to sell the drug. The suit continued to say that without Bristol's antitrust activity, the generic form of Taxol would have been available to patients earlier and saved them millions of dollars.

The suit, spearheaded by Ohio, was filed in U.S. District Court for the District of Columbia.

Paclitaxel was developed by the taxpayer-funded National Cancer Institute and brought through late-stage clinical trials by Bristol-Myers.

"I find it particularly distasteful that Bristol is illegally profiting from a drug which only exists because taxpayers paid for its development in the first place. That's double-dipping at its worst," said Michigan Attorney General Jennifer Granholm, one of the lawyers involved with the suit.

Bristol said this case mirrors other Taxol litigation. "We will continue to deal with the issues raised by this new suit as we have been doing with other litigation related to these matters," company spokesman Robert Laverty said.

Since the introduction of IVAX's (IVX: Research, Estimates) copycat in late 2000, prices for the drug, known chemically as paclitaxel, have dropped sharply, and sales have slumped. Still, Bristol has generated at least $5.4 billion in revenue from the drug since 1998, the state of Michigan said.

The Taxol antitrust suit is the latest blow for embattled Bristol-Myers, already suffering from stiff generic competition on its other key drugs and a failure to bring Erbitux to market after a $2 billion investment in the new cancer drug's developer, ImClone Systems Inc (IMCL: Research, Estimates).

Shares of Bristol-Myers (BMY: Research, Estimates) closed down $1.18, or 4 percent, at $28.65 in New York Stock Exchange trading.  

--from staff and wire reports