Bristol-Myers Squibb Co. (BMY) offered to pay $499 million to settle federal investigations into whether the company allegedly bilked insurers by inflating the wholesale prices of a number of its drugs. The company lowered its outlook to reflect the charges.

The New York-based drugmaker entered an agreement in principle with the Justice Department and the U.S. Attorney in Massachusetts to pay the settlement and avoid civil and criminal charges.

Bristol-Myers will also enter a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement must still get final approval from the Justice Department.

Bristol-Myers spokesman Jeff McDonald said the probe covered "a number" of the company's products introduced before 2006, including the anti-psychotic treatment Abilify, as well as some drugs it has sold off. The company expects the Justice Department review to take "a couple of months" before a decision is made, McDonald said.

Samantha Martin, a spokeswoman for the U.S. Attorney's Office in Massachusetts, would not comment on the settlement offer.

Attorneys general of several states and a number of counties in New York charged that Bristol-Myers inflated the average wholesale prices of its drugs — the same prices that are used by government programs and insurers for reimbursement purposes. All suits were consolidated under the federal district court in Massachusetts.

Bristol-Myers products include the blood thinner Plavix — its best-selling drug — along with blood-pressure drug Avapro, cancer treatment Taxol, and the cholesterol-lowering drug Pravachol. The company booked sales of $19.21 billion in 2005.

As a result of the settlement, Bristol-Myers increased its reserves for the probe by $353 million to total $499 million. Separately, the company will take a charge of $220 million for debt restructuring in the fourth quarter.

With the charges, the company lowered its full-year 2006 estimate for earnings per share from continuing operations to a range of 72 cents to 77 cents, from a range of 97 cents to $1.02. The company reiterated its 2006 earnings outlook of $1.02 to $1.07 per share, excluding charges. Analysts surveyed by Thomson Financial expect earnings per share of $1.04.

The agreement is the latest in a series of deals cut with the government. In June 2005, Bristol-Myers settled federal charges for an accounting scandal that cost the company $800 million, and was placed under the observation of a federal monitor until 2007.

The same monitor recommended in September that the company fire Chief Executive Pete Dolan after a failed agreement to keep a lower-priced generic version of Plavix off the market attracted the interest of federal investigators. Dolan stepped down the next day. The agreement soured when state attorneys general refused to sign off on it.

Shares of Bristol-Myers rose 14 cents to $25.91 in morning trading on the New York Stock Exchange.