In early August, Apotex Inc., started selling a generic version of Plavix, Bristol-Myers Squibb Company's blockbuster blood-thinner. The news was just the latest blow to Bristol-Myers, which had tried desperately to hang on to its billion-dollar drug. In the spring, Bristol-Myers and its partner, French drugmaker Sanofi-Aventis, which markets Plavix in Europe, had negotiated a settlement with Apotex in a patent case over the drug. The settlement fell apart rather spectacularly during the summer when it failed to receive antitrust clearance. In early July the antitrust division of the U.S. Department of Justice launched a criminal investigation into the deal. On July 27, the Federal Bureau of Investigation raided Bristol-Myers executive offices in Manhattan. And in early August, the settlement was rejected by a panel of state attorneys general.

So, what was wrong with the deal? Under the terms of the settlement, Bristol-Myers agreed to move Plavix's patent expiration from July 2012 to June 2011, and pay Apotex a minimum of $40 million. The Federal Trade Commission and the Justice Department declined to comment, and lawyers for Bristol-Myers, Sanofi, and Apotex did not respond to repeated requests for interviews. But Steven Lieberman, a partner at Rothwell, Figg, Ernst & Manbeck who has been involved in similar antitrust cases against Bristol-Myers, says that the FTC and the Justice Department may believe "that the purpose of the agreement was to impede competition, rather than a compromise reflecting truly disputed views regarding the validity of the patent."

Lieberman explains that part of the problem is the small difference between the patent's actual expiration date and the new date agreed upon in the deal. If Apotex had won the patent fight over Plavix, the generic version could have gone on the market this year. According to investment analysts quoted in news reports in March, when the case was originally set for trial, Bristol-Myers had as high as a 40 percent chance of losing.

Whether or not those odds pan out may soon become clear. The litigation is headed back to federal district court in New York, where three other Plavix patent suits have been stayed pending the resolution of the Apotex suit. Another patent suit in federal district court in New Jersey has also been stayed.

Still, even if Bristol-Myers wins the patent case against Apotex, it can not collect the triple damages often available to brand-name companies in cases where a generic rival launches the product prior to any court decision or patent expiration. According to the terms of the settlement, which included provisions that addressed what would happen if the deal was rejected, Bristol-Myers and Sanofi agreed not to sue Apotex for more than 50 percent of the generic company's Plavix sales.

This isn't the first time that Bristol-Myers has gotten into trouble for its patent strategy. The drug company had previously paid out nearly $700 million to settle antitrust claims in 2003 over its attempts to extend the patent life of its antianxiety drug BuSpar. And in a deferred prosecution agreement, Bristol-Myers was required to submit any potential patent suit settlement to a review by both the FTC and a panel of state attorneys general.

As if its antitrust woes weren't enough, the Plavix debacle has also gotten the attention of plaintiffs firms. In May, four class actions were filed against Bristol-Myers in Ohio federal court, claiming that the Plavix settlement violates antitrust laws. And on July 31, lawyers from Strauss & Troy, which filed one of the May lawsuits, filed another two in Ohio against Bristol-Myers, Sanofi, and Apotex, accusing the companies of violating antitrust laws and keeping cheaper drugs off the market.