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Bristol-Myers Strikes DOJ Deal

The company will plead guilty to two criminal counts in the Plavix probe.

Updated from 5:24 p.m. EDT

Bristol-Myers Squibb

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will plead guilty to two criminal counts as part of an agreement in principle with the Justice Department to end a probe into the company's attempt last year to keep generic Plavix off the market.

The government had been conducting a criminal investigation regarding the botched deal Bristol and its Plavix partner


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struck in 2006 with Apotex, a Canadian company that wanted to sell a cheaper copy of the anticoagulant.

By pleading guilty to two counts of making false statements to a government agency, Bristol is facing a maximum fine of $1 million. The charges relate to representations made by a former senior executive Bristol didn't identify Thursday.

The pleas come 12 months after negotiations between Bristol and Apotex that the New York drugmaker didn't disclose to the Federal Trade Commission. The FTC also is conducting an investigation. Bristol had wanted to persuade Apotex to refrain from selling generic Plavix in the U.S. until mid-2011.

However, the arrangement collapsed, and Apotex sold a low-priced version of the drug for three weeks in August before being blocked by a federal court.

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Still, Apotex managed to ship so much generic Plavix during that time that Bristol's sales and profits were affected during the second half of the year and the first quarter of 2007.

Two top Bristol

executives were ousted in September, soon after the Apotex deal fell apart -- Peter Dolan, the chief executive, and Richard Willard, the senior vice president and general counsel.

The injunction against Apotex remains in place while a federal judge decides a patent-infringement claim against the Canadian company filed by Bristol and Sanofi, which licenses Plavix to Bristol for U.S. marketing. Plavix is Bristol's top seller.

The best news for Bristol is that the guilty plea and fine apparently won't violate the terms of a pact the company has with the U.S. Attorney's Office for New Jersey over another matter. If Bristol's actions in the Apotex case had violated the agreement, the company

could have faced criminal charges of securities fraud.

Bristol is operating under a deferred prosecution agreement related to allegations of misconduct over

its accounting for inventories. If the company doesn't violate the terms for 24 months, the U.S. Attorney will cancel it. The expiration date is June 15.

The U.S. Attorney "believes Bristol-Myers Squibb has cured resulting breaches of the Deferred Prosecution Agreement ... by terminating the employment of certain former senior officers ... as well as by taking other actions to prevent the recurrence of the issues and events that led to this matter," the company said in a press release.

"Full compliance with all of the laws and regulations governing our company remains the highest priority for our leadership team, and for me personally," said James M. Cornelius, Bristol's CEO, in a prepared statement.

The company said it doesn't believe the resolution of the Justice Department investigation will have a "material impact on its ability to participate in federal procurement or health care programs, although there can be no assurance of this."

Shares of Bristol dropped 37 cents, or 1.2%, to $29.88 in regular trading.