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The Federal Trade Commission today announced that Bristol-Myers Squibb Company (Bristol) - one of the world's largest drug makers - has settled charges that it engaged in a series of anticompetitive acts over the past decade to obstruct the entry of low-price generic competition for three of Bristol's widely-used pharmaceutical products: two anti-cancer drugs, Taxol and Platinol, and the anti-anxiety agent BuSpar. According to the FTC's complaint, Bristol's illegal conduct protected nearly $2 billion in annual sales at a high cost to cancer patients and other consumers, who - being denied access to lower-cost alternatives - were forced to overpay by hundreds of millions of dollars for important and often life-saving medications.

"This case, and others we have brought and will bring," stated Timothy J. Muris, Chairman of the Federal Trade Commission, "stands for an important proposition: competition must be on the merits, not through misusing the government to stifle your competition."

"Through Bristol's decade-long pattern of alleged anticompetitive acts, Bristol avoided competition by abusing federal regulations in order to block generic entry; deceived the U.S. Patent and Trademark Office (PTO) to obtain unwarranted patent protection; paid a would-be generic rival over $70 million not to bring any competing products to market; and filed baseless patent infringement lawsuits to deter entry by generics,"said Joe Simons, Director of the FTC's Bureau of Competition.

"Today's proposed consent order," Simons said, "will prohibit Bristol from engaging in unlawful behavior that keeps competitive generic products off the market and harms consumers."

Bristol's Drug Products in Question

Based in New York, Bristol develops, manufactures, and distributes prescription pharmaceutical products and other consumer health care products. In 2001, Bristol's total net sales in the United States exceeded $13 billion. The Commission's complaint charges Bristol with illegal conduct concerning three of its products: Taxol, Platinol, and BuSpar.

Taxol, a brand-name drug containing the active ingredient paclitaxel, is used to treat ovarian, breast, and lung cancers, as well as AIDS-related Kaposi's sarcoma. Prior to generic entry in 2000, Bristol's annual U.S. sales of Taxol were over $1 billion. Platinol and Platinol-AQ are different versions of the same brand-name drug containing the active ingredient cisplatin. These products are used for the treatment of various forms of cancer. Prior to generic entry in 1999, BMS's annual U.S. sales of its Platinol products were about $100 million. BuSpar contains the active ingredient buspirone and is used to manage anxiety disorders or provide short-term relief of anxiety symptoms. In 2000, the last full year before generic entry, Bristol's U.S. sales of BuSpar were over $600 million.


Generic drugs generate large savings for consumers because they typically are sold at substantial discounts compared with the price of their branded counterpart. A generic drug is a pharmaceutical product that contains the same active ingredient as its brand-name counterpart, and is commonly referred to as a "bioequivalent"- that is, the U.S. Food and Drug Administration (FDA) has determined that there is no significant difference between the two products. Generic drug competition also dramatically erodes the branded drug's sales and profits. According to the complaint in this matter, within the first year of generic entry, Bristol's sales of each product in question dropped approximately 50 percent.

Because generic entry dramatically reduces sales of a branded counterpart, brand-name pharmaceutical companies have a powerful incentive to delay such entry. The FTC's complaint charges that Bristol engaged in a pattern of conduct to delay generic competition to Taxol, Platinol, and BuSpar by abusing government regulatory processes.

Legislation commonly referred to as the Hatch-Waxman Act, which governs FDA approval of generic drugs, provides that the brand-name company must submit to the FDA information on certain types of patents relating to its product. The FDA lists an approved drug and its related patents in a publication referred to as the "Orange Book."

Once a patent is in the Orange Book, a firm seeking to market a generic product prior to the expiration of a patent or patents relating to the branded drug upon which the generic is based must submit a certification to the FDA, asserting that the patents listed in the Orange Book either are invalid or will not be infringed by the proposed generic product, and provide notice of this certification to the patent holder. If the patent holder files a patent infringement suit within 45 days of this notification, FDA approval to market the generic drug is automatically stayed for 30 months, regardless of the merits of the suit, unless before that time the patent expires or a court holds that the patent is invalid or not infringed.

The listing of patents in the Orange Book, therefore, plays a substantial role in the timing of FDA approval of generic drugs. The complaint charges that Bristol abused the Hatch-Waxman process and the special statutory 30-month stay by listing patents in the Orange Book which did not meet the listing criteria. The statute allows listing only if: 1) the patent "claims the drug or a method of using the drug;" and 2) the patent is one "with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug."

Bristol was able to make such alleged wrongful listings, according to the FTC, because the FDA does not review patents presented for listing in the Orange Book to determine whether they do, in fact, meet the statutory listing criteria. Once listed in the Orange Book, improperly-listed patents have the same power as any validly-listed patent to trigger a 30-month stay of generic approval, thereby delaying generic entry and potentially costing consumers millions, or even billions, of dollars without valid cause.

The Commission's Complaint

The Commission's recent study, Generic Drug Entry Prior to Expiration (July 2002), examined the potential for abuse of the Hatch-Waxman process for Orange Book listings and 30-month stays. The Commission found that later-listed patents - those listed in the Orange Book after a generic manufacturer has sought FDA approval for a competing generic version - led to substantial delay of FDA approval, often enabling the brand-name manufacturer to obtain multiple 30-month stays. The report also found that later-listed patents frequently presented significant questions as to whether they met the statutory criteria for listing.

Of the eight drugs involving later-listed patents identified in the FTC study, three involve the Bristol products that are the subject of the complaint and order announced today. For these three drugs, the complaint alleges that Bristol submitted patents for listing in the Orange Book after an Abbreviated New Drug Application (ANDA) already had been filed with the FDA - and in the case of BuSpar, literally hours before generic rivals were set to enter the market. An ANDA is filed to demonstrate that a generic product is bio-equivalent to its branded counterpart, but the ANDA need not contain independent data on safety and efficacy. The complaint further asserts that each of these patent listings was improper and unlawful because the patent did not meet the statutory listing criteria, and Bristol could not reasonably believe that it did.

In addition to alleging improper listings, the complaint also states that Bristol entered into two unlawful agreements - one concerning BuSpar and another concerning Taxol - to obstruct generic competition and share monopoly profits. With respect to the BuSpar agreement, Bristol is alleged to have paid its potential buspirone rival over $70 million to withhold competition until patent expiration, eliminating the only potential generic threat to BuSpar for the entire patent period. With respect to the Taxol agreement, the complaint alleges that Bristol conspired to list improperly an invalid patent in the Orange Book. Accordingly, the proposed consent order restricts Bristol's ability to act in concert with other firms to delay generic competition.

Terms of the Proposed Order

To prevent recurrence of Bristol's pattern of alleged improper listings, the proposed consent order, among other restrictions, eliminates Bristol's ability to obtain a 30-month stay on later-listed patents. By denying Bristol the benefit of the 30-month stay on later-listed patents, the order would reduce Bristol's incentive to engage in improper behavior before the PTO and the FDA to obtain and list a patent for the purpose of obtaining an unwarranted automatic 30-month stay. The proposed order also bars a 30-month stay, regardless of when the patent was listed, in cases where Bristol has engaged in certain types of misconduct in connection with obtaining and listing the patent, including: inequitable conduct before the PTO in obtaining the patent; making false or misleading statements to the FDA in connection with listing the patent; or providing information about the patent to the FDA that is inconsistent with information provided to the PTO.

The proposed order does not, however, affect Bristol's ability to sue a generic company for patent infringement under ordinary federal litigation procedures or to obtain a preliminary injunction to prevent sale of the generic product before conclusion of the suit if Bristol can demonstrate a likelihood of success on the merits, among other factors. The proposed order would expire in 10 years.

The Commission vote to accept the proposed consent order and place a copy on the public record was 5-0. The proposed consent order will be subject to public comment for 30 days, until April 7, 2003, after which the Commission will determine whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

The Commission cooperated in its investigation of Bristol with various state attorneys general that had filed their own antitrust suits in federal court. The states have reached agreements in principle to settle these suits. By mutual agreement, the States deferred to the Commission whereby the FTC assumed the lead in negotiating the conduct limitation provisions contained in the proposed order. The states will enter essentially the same injunctive terms in their orders. In addition to the injunctive relief, the states will recover substantial monetary relief.

(FTC File Nos. 001-0221; 001-0046; 021-0181)

Contact Information

Media Contact:
Mitchell J. Katz
Office of Public Affairs
Staff Contact:
Susan A. Creighton
Deputy Director, Bureau of Competition

Jeffrey Brennan
Assistant Director, Bureau of Competition