Frederick Lacey remembers the day well: July 26, 2006. Lacey, a retired federal district court judge, was serving as a corporate monitor for Bristol-Myers Squibb Co. He had spent the last 37 months helping the drug giant reform its compliance practices after it violated securities laws. As a favor to some of Bristol-Myers’ senior executives, he joined them on a trip to Boston to meet with U.S. Attorney Michael Sullivan. The company was trying to settle a probe by Sullivan’s office on another disturbing matter: whether it had inflated drug prices on bills to insurers and government agencies. At the July meeting, Lacey recalls, he praised Bristol-Myers and assured Sullivan that the company had cleaned up its act. Under Lacey’s watch, it had changed its top financial executives, added a new compliance officer, and adopted a healthy new attitude toward being a good corporate citizen.
Even as he was speaking those words, Lacey would learn later, Bristol-Myers was in legal trouble in yet another area. While Lacey sat in Boston, Federal Bureau of Investigation agents raided Bristol-Myers’ corporate headquarters in New York. The FBI, sent by the U.S. Department of Justice’s antitrust division, was searching for evidence that executives at the pharmaceutical company had — just a few months earlier — cut a clandestine noncompete deal with a generic drug rival. The company, which declined to comment for this story, would later admit making false statements to federal regulators about the secret contract.
