TORONTO (Reuters) - Biovail Corp BVF.TO BVF.N said on Friday it is being investigated by a U.S. federal grand jury in Boston in connection with the 2003 commercial launch of its Cardizem LA heart drug, and analysts speculated the probe might delve into whether physicians were paid to prescribe the treatment.
The company would not elaborate on the exact nature of the investigation, and officials in Boston would not comment.
“We’re not confirming or denying a grand jury investigation,” said Christina Diiorio-Sterling, a spokeswoman at the United States Attorney’s Office, District of Massachusetts.
Biovail’s statement on the probe sent its shares down 54 Canadian cents, or 3.9 percent, to C$13.17 on the Toronto Stock Exchange on Friday on double its average volume.
The company, Canada’s biggest publicly traded drugmaker, said in a release that it has been asked to provide evidence on the Cardizem LA launch and “intends to do so as soon as practicable.”
Biovail said it would not make any further comment on the issue on the advice of its lawyers.
“This is an extension of an old investigation moving to the next step,” said John Maletic, an analyst at Scotia Capital. “It is no different from the investigation that is being taken by the (Securities and Exchange Commission).”
In 2003, U.S. officials had sought information from Biovail related to promotion and marketing surrounding the launch of Cardizem LA and a related clinical program.
Biovail paid physicians $1,000 to participate in the program, which involved prescribing the drug to 15 patients and completing a survey.
The company said it was cooperating fully with the grand jury investigation, which started as an administrative inquiry, and would continue to do so.
A number of other companies have recently faced probes and steep fines for conducting similar programs.
Analysts estimated that a settlement in the case could cost Biovail a fraction of the $35 million in sales it made during the 2003 program, which only lasted for two to three months.
Biovail has been plagued with lawsuits and regulatory probes for several years.
In 2003, the U.S. Securities and Exchange Commission launched an inquiry into its accounting methods.
That investigation relates to a company warning of a revenue shortfall in the third quarter of 2003, an October 2003 truck accident involving a shipment of its Wellbutrin drug, and its disclosure of the accident’s impact on 2003 earnings.
“This marketing thing and the SEC thing is still outstanding and when these things get resolved it should help the stock,” said Paradigm Capital analyst Claude Camire. “But we need to get over this period of time which has been impacted by a number of issues.”
Reporting by Scott Anderson; Editing by Peter Galloway