Former Biotech CEO Charged With Illegal Marketing
5 CommentsBy Ed Silverman // March 19th, 2008 // 8:00 am
W. Scott Harkonen, who once headed InterMune, was charged in federal court on Tuesday with orchestrating an off-label marketing scheme for the Actimmune drug. Harkonen was ceo from 1998 until 2003, and during that time, he is accused of making false and misleading statements about how effective the drug was in combatting a fatal lung disease, idiopathic pulmonary fibrosis, or IPF, the Associated Press writes.
A press release Harkonen wrote touting the benefits of Actimmune to treat IPF in August 2002 is at the heart of the government’s case. The press release stated that a large-scale scientific test showed the drug helped IPF patients live longer, prompting many docs to write scrips even though Actimmune wasn’t approved for that disease. The Department of Justice says a specialty pharmacy then distributed the misleading info in the press release to more than 2,000 pulmonologists and to patients taking Actimmune.
The FDA approved the drug to treat immune system disorder and a bone disease, which cost about $50,000 per patient per year, and the vast majority of Actimmune’s sales were for IPF patients. Prosecutors allege that the test Harkonen cited in the press release was a failure and that there’s no proof the drug played any role in extending life. InterMune discontinued testing the drug for IPF last year because of disappointing results.
This is interesting, yes? After all, the government pursuit of off-label or some other inappropriate marketing schemes usually involves a large fine and a corporate integrity agreement, not the criminal pursuit of a ceo or some other high-ranking exec. Purdue Pharma was a notable exception. Perhaps examples are being set.
Harkonen’s attorney, James Brosnahan, said his client intends to plead not guilty, and there’s evidence, including a study published in the New England Journal of Medicine, that shows Actimmune does help IPF patients. “By this indictment, the government is trying to criminalize an important potentially life-saving scientific debate,” Brosnahan tells the AP.
Harkonen is now ceo at CoMentis, and declined comment. “Dr. Harkonen is providing able and strong direction to CoMentis and the company’s Board of Directors and executive management team support him,” CoMentis wrote in an e-mail to the AP.
In 2006, InterMune paid a $37 million fine to settle similar charges against the company after federal officials launched an investigation in 2004. “Since 2004, InterMune has been a transformed company with a new management team, a rigorous compliance program and a promising pipeline focused on serious pulmonary and hepatic diseases,” the biotech said in a statement.
Justice in Michigan
Indeed, prosecutions of ceos or other high-ranking people are extremely rare, especially in recent years. The question remains whether this is a kind of “show trial” for FDA PR or reflects any significnat policy change.
harpy
At a recent conference I attended the panel of prosecutors agreed that going after the c-suite is the next step in prosecutions. Punishing the companies, while quite lucrative, isn’t leading to the kind of reform they want to see. While prosecuting executives is much more difficult, it will most likely bring about a more earnest reform. NJ’s Christie also mentioned prosecuting doctors for their collusion in illegal activities and I saw something the other day restating his interest (sorry, no link).
Justice in Michigan
Q for Harpy - I would have thought prosecuting individual execs would be more difficult than companies because you have to have “particular goods, on particular people.” You suggest the contrary. I’d be very interested to learn more about that.
Also, I’m reminded of a line - I think from Braithwaite’s classic on corporate corruption in pharma - that there is always “a vice president in charge of going to jail.” That would also suggest prosecuting individuals may have limited impact….but perhaps not if it’s higher up than a VP.
ol cranky
From what I’ve heard a lot of qui tam lawyers won’t bother with good cases in which the they don’t expect big fines (or that the company can pay a big fine) because they don’t think the DOJ will move the case forward. It’s nice to know that the government will consider going after a sleazy CEO of a small company (especially since I can think of a couple of former execs of of a small company that have always banked on being one step ahead after destroying their company and never being held accountable for less than compliant activities and retaliating against employees).
harpy
JIM - No, I agree that prosecuting individuals is far more difficult than prosecuting companies, however, I’ve heard the prosecutors state that they know it isn’t the companies that are perpetrating fraud, but the people in charge. The DoJ’s ability to pursue health care corruption has been greatly enhanced since the passage of HIPAA and the prosecutions are getting increasingly sophisticated. TAF (taf.org) says for every $1 invested by the government to investigate fraud they get $15 in return. But the incredible fines being paid are almost becoming passe because there’s a new one every couple of months - obviously the fines aren’t working. The prosecutors say they want to reform the industry, which means pursuing those in charge. More difficult, but maybe more rewarding in the long run.
Ol’ Cranky - WSJ Health Blog had this to say about small company prosecution.