Three years after pleading guilty to a criminal misdemeanor in connection with the misbranding of the OxyContin painkiller, a federal judge has ruled three former Purdue Frederick execs are barred from working for any company that does business with Medicare, Medicaid and other federal health care programs for 12 years.

The ruling affirms an order from the US Department of Health and Human Services, which initially sought to exclude Michael Friedman, the former ceo and president; Howard Udell, the former exec vp and general counsel (see photo); and Paul Goldenheim, the former chief medical officer and R&D chief, for 20 years. “We are disappointed by the court’s ruling,” attorneys for the former execs say in a statement sent us. “Our clients continue to believe that the government has exceeded its statutory powers in imposing exclusion, and they plan to appeal this ruling.”

The decision rests on what is known as the ‘responsible corporate officer,’ in which execs can be held strictly liable for failing to exercise their authority to prevent, detect or correct violations of the Food, Drug and Cosmetic Act, even if there is no proof of their own misconduct (read more here and read the ruling here).

This is the second time in recent weeks that a former pharma exec has been excluded from dealing with federal health care programs, which can, effectively, derail a career with healthcare companies. Last month, a ban was imposed on Marc Hermelin, the former chairman of KV Pharmaceutical (look here). These moves come amid a growing outcry that more pharma execs should be held accountable for fraud on their watch. Toward that end, the House recently passed a bill closing a loophole that allows execs to continue to do business with federal programs (read here). The FDA is also targeting execs for misdemeanor prosecutions if their companies engage in off-label marketing (see this).

In the OxyContin case, which generated tremendous publicity due to the widespread and improper use of the medication, the government claimed Purdue Frederick misled patients, regulators and doctors about the addictive risks. All totaled, Purdue and the three execs paid $634 million in fines, although the company actually paid the share assessed against the execs, who avoided jail time (background here).

The Purdue Frederick subsidiary pled guilty to felony misbranding as part of the settlement and was automatically debarred from winning new government contracts. Purdue Pharma, the parent company, avoided criminal charges by striking a nonprosecution agreement and paying the fines, was allowed to receive contracts. The former execs, however, argued they were innocent third parties because there was no personal wrongdoing and that excluding them from doing business with federal health care programs was inconsistent with the law. They also maintained the 12-year exclusion was unreasonable.

But in her ruling, US District Court Judge Ellen Segal Huvelle wrote that the former execs “specifically acknowledged” in their plea deals that they were “responsible corporate officers” and “responsibility and authority either to prevent…or to promptly correct” misbranding, but failed to do so. “It strains credulity to argue that despite this admission, they ‘were not accused of committing any unlawful acts
themselves’ and ‘were convicted based solely on their status as senior executives, without any culpability or wrongful action on their part at all.’ ”

The decision was hailed by Patrick Burns of Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits. “It’s simply ridiculous that a small-time crook who rips off Medicare gets 10 years in jail, while the folks at the big pharma and device companies who steal hundreds of millions do not even lose their jobs. Purdue’s off-label marketing of OxyContin left people addicted and dead. And we are supposed to feel sorry for the folks that green lighted that?

If we are ever going to bring change to the pharmaceutical arena, we need to bring the pain, and that pain has to be personal…With these big cases, we also need to draw up a list of complicit corporate officers to exclude. Up to now, only the whistleblower - the person with integrity - has last their job. Now the CEOs, the CFOs and top division managers are going to have to explain to their spouses why they are unemployed and unemployable.”