TRENTON, N.J. (AP) Drug maker Wyeth disclosed yesterday that the Justice Department’s antitrust division plans to have a grand jury review whether the company colluded with another pharmaceutical firm on certain sales commission rates.
Madison, N.J.-based Wyeth, formerly called American Home Products Corp., said in a filing with the Securities and Exchange Commission that the antitrust division has informed Wyeth it intends to refer to a grand jury an inquiry into purported “collusive practices” involving another, unidentified drug company. Wyeth was notified of this last month.
The SEC filing, related to Wyeth’s announcement Monday that it plans to sell $1.25 billion worth of 10-year bonds this week, says the collusive practices relate to commission rates for a broker “for a small segment of the over-the-counter drug business.”
Fran Sullivan, spokesman for Wyeth Consumer Healthcare, said the broker cited in the filing is a distributor and is not a Wyeth employee.
Mr. Sullivan said he could not disclose the names of the distributor or the other drug company involved and did not know when the case would go to a grand jury.
Wyeth officials wrote in the filing that they expect a subpoena “in the near future.”
“We believe that our practices regarding brokers have not violated the antitrust laws,” they wrote.
A Justice Department spokeswoman said she could not comment on the case.
Wyeth sells a number of well-known nonprescription drugs, including painkillers Advil and Anacin; Chap Stick; Preparation H for hemorrhoids; and Robitussin and other cough and cold remedies. Consumer health products account for about 15 percent of Wyeth’s $15 billion in annual sales.
It also sells some animal health products, but most of its revenue comes from prescription drugs, including heart drugs Cordarone and Inderal; several vaccines; painkillers Enbrel and Oruvail; Ativan for anxiety; and the hormone-replacement pills Premarin and Prempro for menopausal symptoms. Sales of the latter two drugs and Wyeth’s stock price plunged after a huge study in July found a higher-than-expected risk of heart attack and breast cancer in women taking Prempro, the most popular estrogen-progestin combination pill.
Wyeth shares fell 68 cents, or 1.8 percent, to close yesterday at $37.10 on the New York Stock Exchange. Ten months ago, shares traded as high as $66.51.
Separately, Wyeth wrote in the proxy that the SEC informed the company last month that the agency was “conducting an informal inquiry into allegations of illegal activities and ethics violations raised by a former employee of ours in a lawsuit claiming retaliation and constructive discharge.”
Wyeth officials stated they intend to cooperate fully with the SEC and said accusations in the ex-employee’s lawsuit are “without merit.”
That case, first reported in mid-January, involves a former Wyeth executive who claims the company cheated foreign governments out of tax payments stemming from bonuses. Peter Rost says he was demoted for alerting superiors about the practice.
According to documents in a lawsuit Mr. Rost has filed against Wyeth, Mr. Rost learned of the practice in 2000 while heading Wyeth’s operations in Sweden. He said the company was warned about it in 1995 by the Ernst & Young accounting firm. Wyeth denied the charges last month.