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news.Bristol-Myers Squibb has reached an agreement to settle several investigations by the US government involving the company's drug pricing, and sales and marketing activities, with an expected payment of $499 million.
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The agreement in principle provides for a civil resolution, which means that there will be no criminal charges against the company. The settlement, reached with the United States Department of Justice and the Office of the United States Attorney for the District of Massachusetts, concludes investigations into the company that began several years ago.
Bristol-Myers said that as a result of the payment, it has increased its reserves related to these investigations by $353 million, to a total of $499 million, which will be recorded in the fourth quarter of 2006. In addition, the company will record an estimated pre-tax charge of $220 million for the previously disclosed debt restructuring completed in the fourth quarter, unrelated to the agreement.
As the two charges were not reflected in previously issued 2006 earnings guidance, Bristol-Myers is lowering its 2006 full-year earnings guidance to between $0.72 and $0.77, from $0.97 and $1.02 as previously provided at the end of the third quarter of 2006.