Melvin Parker
Columbia Southern University
Case Study #3

1. Why did Bristol-Myers Squibb and Sanofi-Aventis seek a settlement rather than let the patent infringement case go to trial?
Brystol-Meyers Squibb and Sanofi-Aventis seeked settlement rather than the patent infringement because Apotex had received approval from Food and Drug Administration. The approval allowed Apotex to market the generic version of Plavix at its own risk. Bristol-Meyers also found out that the Federal Trade Commission (FTC) had expressed opposition to agreements that restricted the introduction of generic drugs which might become anti-competitive. With those reasons, Bristol-Meyers Squibb and Sanofi-Aventis want to seek a settlement with Apotex due to FTC approval, delaying the launch of Apotex generic drug until its patent expire that could ensure a continued monopoly until expiration. In addition that, Plavix was the best-selling of Bristol Myers Squibb’s drug and was crucial to the success of the company. Plavix was marketed in the United States by Brystol-Myers Squibb, and U.S. sales were 3.5 billion in 2005 with worldwide sales of over 6 billion. Baron (2010).

2. Should Bristol-Myers Squibb and Sanofi-Aventis have attempted to pay Apotex to prevent it from launching a generic version of Plavix? No. According to Baron (2010) Apotex had invested millions of dollars to construct production facilities and begin to produce clopidogrel bisulfate in late 2005. Bristol- Meyers Squibb and Sanofi-Aventis learned that Apotex had built an inventory of clopidogrel bisulfate, and with a trial on the merits of the patent infringement lawsuit scheduled for June 2006, they initiated the settlement negotiations with Apotex. The deal offered was to prevent Apotex from launching their version of plavix. The strategy exerted by Sherman of Apotex was considered to be great judgment call on his part as well as the business. I believe he acted ethically in his strategy and negotiated terms that would benefit his business. He performed extensive research and found many distributors who wanted to purchase Plavix at very low and reasonable cost. On August 8th Apotex launched its generic Drug. Sherman states that, “There should be no mistake that our decision to launch a generic of this blockbuster product at risk is a testament to our commitment to patients, consumers and taxpayers (Baron, 2010). 3. Was Sherman’s strategy that of a shrewd business executive? Did Sherman act ethically in his strategy?
No. Baron (2010) noticed that Sherman’s strategy was not of a shrewd business executive because he stated that there should be no mistaking that our decision to launch a generic version of this blockbuster product at risk is a testament to our commitment to patients, consumers and taxpayers. Sherman did not act ethically in strategy because he said in an interview “I thought the FTC would turn the modified agreement down, but he didn’t want to be led on that he did. 4. Should the FTC and the state attorneys general have rejected the agreements? Yes. Baron (2010) exposed that the FTC was reportedly concerned about the break-up fee and the six month period before Brystol-Myers Squibb and Sanofi-Aventis could begin marketing their own generic drug. After the agreement was rejected, Brystol-Myers Squibb CEO, Peter R. Dolan sent executive vice President Dr. Andrew G. Bodnar to Toronto to negotiate a modified agreement that would satisfy the regulators.

5. Did Bristol-Myers Squibb likely violate the deferred prosecution agreement?
Yes, the deferred prosecution agreement was violated due to Bristol-Myers On Aug. 4, 2004, without admitting or denying the allegations in the Commission's complaint, BMS consented to be permanently enjoined from violating certain provisions of the federal securities laws. The company also agreed to remedial measures and to pay $150 million to compensate investors. By distributing the money under a single distribution plan, administrative costs are substantially reduced.

Reference
Baron, D. P. (2010). Business and its environment (6th ed.). Upper Saddle River, NJ: Prentice Hall.