Bristol reaches $80 million deal to settle Hepatitis C claims

Bristol-Myers Squibb Co. agreed to pay $80 million to settle cases involving 15 patients killed or hurt during company-sponsored testing of an experimental drug for hepatitis C.

Now the patients and families must sign onto the tentative settlement and submit to binding arbitration to determine how much money each will receive, according to a letter, reviewed by The Wall Street Journal, outlining the terms of the deal.

The letter, which was sent to a trial subject in Texas by the two lead plaintiffs' lawyers, described the $80 million figure as better than the lawyers expected.

"We are especially pleased," wrote the lawyers, Robert Hilliard and Stephen Sheller, who noted that they expected a $40 million to $50 million deal. Signing off on the agreement "avoids protracted and lengthy litigation and also the very real likelihood Bristol-Myers would have spent years appealing any large jury verdict."

Messrs. Hilliard and Sheller declined to comment.

A spokeswoman for Bristol said the sides "have an agreement in principle to settle the matters that were in mediation. The terms of the settlement are confidential."

The settlement, reached during two days of talks last week, would resolve the legal cloud that has hung over Bristol since it abruptly scuttled development of its hepatitis C pill and took a $1.8 billion charge last August, after one patient died during testing and several others were hospitalized.

The company has said the hearts or kidneys of trial subjects were damaged, though Bristol hasn't identified a cause. Bristol said it had halted the trial in the "best interest of patients."

New York-based Bristol could have faced costlier jury verdicts. The company had received requests for medical costs and damages totaling more than $500 million from the injured patients.

The company must still overcome the setback to its efforts to enter the rapidly growing $5 billion market for treating hepatitis C. Infection with the virus is a leading cause of liver transplants and often fatal. Some 3.2 million people in the U.S. and 150 million world-wide have chronic infections.

Bristol was testing the drug, known informally as 094, to see if it could be part of a new regimen of pills that would be stronger and easier to take than current treatments. The drug was the crown jewel of Bristol's $2.5 billion acquisition last year of Inhibitex, which initially developed the pill.

Now, without it, Bristol lags in the competition with Gilead Sciences Inc., GILD +2.03%AbbVie Inc. ABBV -0.90%and other companies racing to develop the next generation of hepatitis C treatments, and Bristol might need to find a partner with a pill belonging to the same class as the one Bristol shelved, analysts say.

"We continue to advance our portfolio" of hepatitis C drugs in development, Bristol CEO Lamberto Andreotti told analysts and investors during a call Wednesday reporting the company's fourth-quarter earnings.

In the quarter, Bristol sales dropped 23% to $4.19 billion from a year earlier because of generic competition for blood thinner Plavix, which had been the company's top-selling product before losing patent protection last year. The drug maker's profit rose 8.6% to $925 million, or 56 cents a share, on a tax benefit from the Inhibitex acquisition.

(Published by WSJ - January 25, 2013)