Accounting & Tax

Bristol-Myers Settles Lawsuits for $89M

The company also reportedly faces a deferred prosecution by the Justice Department.
Stephen TaubJune 3, 2005

Bristol-Myers Squibb Co. has taken another step toward putting its accounting scandal behind it. The pharmaceutical giant agreed to pay $89 million to settle four lawsuits brought by plaintiffs who chose not to take part in last summer’s $300 million settlement.

The lawsuits were related to wholesaler-inventory and other accounting matters, and to the company’s relationship with ImClone Systems Inc., according to Bristol-Myers. As part of the settlement, the company did not admit to any wrongdoing.

Bristol-Myers had previously established a litigation reserve of $140 million. The company added that in the second quarter, it expects to reserve an additional, unspecified sum for what it calls “remaining matters,” presumably federal investigations, observed The Wall Street Journal.

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In March 2003, the company acknowledged that it overstated revenue by $2.5 billion from 1999 to 2001 because of wholesaler incentives.

Last month, the Journal reported that the drug maker’s board was told by the Department of Justice that the agency would seek a “deferred prosecution” of the company. Provided that Bristol-Myers lives up to certain settlement terms over a period of time, the paper elaborated, the DoJ would dismiss criminal charges.

This is a new strategy on the part of the Justice Department. According to a Bloomberg story in January, companies that have agreed to deferred-prosecution provisions include Time Warner Inc., Computer Associates International Inc., American International Group Inc., PNC Financial Services Group Inc., and AmSouth Bancorp.