I bring you the end of a devious saga at Bristol-Myers Squibb (NYSE:BMY) that was taken straight from "Since Everybody Is Doing It, It Must Be OK."
Doctors are allowed to prescribe market-approved drugs for any use they see fit -- it's referred to as off-label use. However, the pharmaceutical companies that make the drugs are prohibited from marketing them for uses not approved by the Food and Drug Administration. Apparently, the fact that it was illegal didn't stop Bristol-Myers. On Friday, the company agreed to pay $515 million to resolve state and federal investigations into this practice as well as other shady practices alleged to have occurred when Peter Dolan was CEO and before then -- from 1994 to 2005.
The fact that this has been going on in the industry should come as no surprise. Other culprits that recently agreed to fines for similar dealings include Schering-Plough (NYSE:SGP) and Pfizer (NYSE:PFE), also alleged to have promoted products for uses that hadn't been approved by the FDA. In the Bristol-Myers settlement, there was a score of other charges, including that the company had misreported its lowest price on an antidepressant to Medicaid as well as inflated the prices of some of its oncology and generic drugs, knowing that federal health-care programs were using this information to establish reimbursement rates.
Bristol-Myers noted that the settlement wouldn't hinder its business with any customers, including the government. The settlement had little effect on the stock price, and if anything should be viewed as a positive sign now that this mess is out of the way. It might make Fools a little bit more skeptical the next time they pay a visit to their doctor, though.
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