Robert Steyer
Dolan and Willard were ousted in the wake of their roles in negotiating a deal with the Canadian generic-drug maker Apotex that was meant to forestall generic competition for Plavix, the Bristol-Myers' blockbuster sold under a licensing arrangement from France's Sanofi-Aventis (SNY Quote - Cramer on SNY - Stock Picks).
However, that agreement proved to be both ill-conceived and an expensive embarrassment. To begin with, the deal required approval by the Federal Trade Commission and the states' attorneys general. Before the FTC could even reach a decision, the states' top legal officers rejected the proposal. Making matters worse was a stipulation that Bristol-Myers and Sanofi-Aventis were bound by terms that delayed their effort to block Apotex from selling generic Plavix. As a result, Apotex sold its copycat drug for about three weeks before Bristol-Myers and Sanofi-Aventis secured a preliminary injunction halting shipments. However, the judge who agreed to the injunction, pending a full hearing on the Plavix makers' patent infringement suit against Apotex, didn't order a recall of the generic drugs that had already been sent out. That forced both Bristol-Myers and Sanofi-Aventis to reduce their 2006 earnings estimates. More importantly, the Apotex pact raised questions about whether Bristol-Myers had violated a 2005 deferred prosecution agreement that was reached with the U.S. attorney's office in New Jersey in another government investigation. That matter involved allegations of "channel stuffing," that is, the hyping of wholesaler inventory figures to improve sales, as well as accounting irregularities. As part of the agreement, Bristol-Myers paid $300 million to a shareholder fund that had already been established under a previous settlement with the Securities and Exchange Commission.
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