Drug company Bristol-Myers under investigation by regulators for possible revenue inflation

The company is cooperating with the investigation, Bristol-Myers spokesman Bonnie Jacobs said Thursday.

The investigation centers around whether it was appropriate for Bristol-Myers to offer wholesalers incentives to buy drugs last year to help the company meet earnings projections.

The investigation, first reported in the Financial Times, comes at a time when the government is probing the financial practices at a wide range of companies, including Enron, WorldCom and Qwest.

Earlier this year, Bristol-Myers announced the inventory glut caused by the incentives will slash this year's earnings by close to 30 percent below 2001 levels. It also said the glut would shave between 35 cents a share and 40 cents a share, or $800 million to $1 billion, off earnings from the second quarter of this year through the first quarter of 2003.

Offering incentives to wholesalers is common in the industry, but the financial fallout from Bristol-Myers' aggressive program is not.

The investigation comes at a particularly difficult time for Bristol-Myers, which has been plagued by serious problems over the last year.

Last year, Bristol-Myers agreed to pay up to $2 billion for a 19.9 percent stake in ImClone Systems Inc. and share of the profits of its promising cancer drug Erbitux. Bristol-Myers has already written off $875 million of that investment because ImClone stock tanked after the Food and Drug Administration rejected the Erbitux application.

Revenue also was affected by the company's loss of market exclusivity on the cancer drug Taxol, the anti-anxiety drug BuSpar and the diabetes treatment Glucophage.