Forest CEO Faces Ban From Medicaid & Medicare
34 CommentsBy Ed Silverman // April 14th, 2011 // 6:30 am
Six months after Forest Labs pleaded guilty to obstruction of justice, distributing an unapproved drug and illegally promoting two other meds, ceo and president Howard Solomon (photo at left) now faces being excluded from participating in federal healthcare programs, according to a letter the drugmaker received yesterday from the US Department of Health and Human Services Office of the Inspector General. In a statement released last night, Solomon says he will challenge the move, which Forest calls “unwarranted and unprecedented.”
To settle matters, Forest made a $313 million payment that included $164 million in criminal penalites, and signed a corporate integrity agreement. The drugs in quetion were Levothroid, an oral med for thyroid conditions, and two antidepressants - Celexa and Lexapro. Forest was charged with distributing Levothroid in the early 1990s without obtaining FDA approval (back story).
This marks one of the rare instances in which the feds have moved to ban a top executive from a drugmaker from participating in Medicare and Medicaid. However, the feds have repeatedly signaled their intentions to make examples of the c suite in response to a growing number of cases over the past several years involving off-label marketing, among other violations (read here).
Last year, former KV Pharmaceutical chairman Marc Hermelin was excluded and he later pleaded guilty to presiding over the production and distribution of oversized morphine sulfate tablets (see here). And three current and former Purdue Pharma execs, who pleaded guilty to a criminal misdemeanor in connection with the misbranding of the OxyContin painkiller, were also banned (read this).
As for Solomon, he was given 30 days to explain why he should not be excluded and, if he fails to convince a court, he would have to resign his executive jobs with Forest. Not surprisingly, he plans to take immediate legal action. In its statement, the drugmakers says “the only basis given in the letter notifying Mr. Solomon of the potential action is that he is ‘associated with’ Forest.” Of course, the feds have made clear they would target top execs who have ultimate responsibility for illegal actions.
“It would be completely unwarranted to exclude a senior executive against whom there has never been any allegation of wrongdoing whatsoever. Mr. Solomon has always set a tone of the highest integrity from the top. At Mr. Solomon’s direction, the Company has significantly enhanced its sales force monitoring and compliance procedures. We believe the potential HHS-OIG action may well be beyond its legal authority.” William J. Candee III, a Forest board member who chairs the audit committee says in the statement.
“At no time during the government’s six year investigation of Forest was Mr. Solomon ever accused of any wrongdoing in connection with the matters settled in 2010. We are hopeful that HHS-OIG will decide that the facts and circumstances as to Mr. Solomon do not warrant an exercise of its exclusion authority.”
Forest also complains that no ceo from other big drugmakers that have pleaded guilty to similar infractions, a list that includes Pfizer and Eli Lilly. “Numerous other major pharmaceutical companies have plead guilty to much more egregious offenses, and none of them has faced the exclusion of a senior executive who has not himself been convicted of a crime or pleaded guilty to a crime. We believe that HHS-OIG is contemplating using a statute that has never before been used under these circumstances and would be exceeding the bounds of its authority,” says Forest vp and general counsel Herschel Weinstein.
To justify its views, Forest also recited recent management changes following the guilty plea. Last November, the drugmaker promoted several execs as part of a succession plan. Those involved were Elaine Hochberg, exec vp and chief commercial officer; Frank Perier Jr., cfo and exec vp for finance and administration; Marco Taglietti, sr vp R&D who heads the Forest Research Institute; David Solomon, sr vp corporate development and strategic planning (and Howard’s son). And the statement says these folks can run the show in the event Solomon must “step aside temporarily pending the outcome of litigation.”
UPDATE: We asked Credit Agricole Securities analyst David Maris for his thoughts and he wrote us this: “This whole thing is odd and mysterious. Did Forest violate their Corporate Integrity Agreement, and if so how? The Corporate Integrity Agreement that Forest signed includes penalties for material breaches of conditions, and one of them is exclusion from Federal programs.
“We wonder if Solomon is the target of HHS or is Forest and Solomon is simply ready to take the fall in order to try to satisfy the HHS? It is also important to know whether Forest received a Material Breach Letter or a Notice of Exclusion letter. Our understanding is that a Material Breach Letter would have come before a Notice of Exclusion, so if they received a Notice of Exclusion, then when did they get the Material Breach Letter?
“The $64,000 question to us are whether Forest or Solomon are being accused of wrongdoing. The action by HHS is rare, but that does not mean it is unwarranted. If HHS makes companies sign corporate integrity agreements, but then never enforces them, they don’t have teeth. Well, yesterday, HHS showed it has teeth - sharp ones.”
ANOTHER UPDATE: A Forest spokeswoman later wrote us to say that the drugmaker “did not violate the CIA agreement and was never accused of doing so. The company simply received a form letter from HHS-OIG of the potential notice of exclusion that only said that Howard was ‘associated’ with Forest.”
Bruce Wayne
One of the most corrupt companies in American pharma. This is a movethat should be applauded. Its laughable that this individual who led the company and profited handsomely during the period of the fraud feels he should go untouched. Be glad for no prison time.
Curious...
Sorry, but Batman is right.
Forrest has ALWAYS been known to do whatever it takes to get the business.
Just ask the reps that still work there.
I am glad to see the agency finally walking the walk, instead of talking the talk.
BRAVO!
MsPiggy
I’m not sure how we are to rate the most corrupt companies…they all seem to follow the same criminal business model.
Solomon is rich beyond fathoming from the crimes his company has perpetrated upon the American Public. The fact is that these crimes paid off huge. Being banned from medicare/medicaid @ this juncture is far to little, far to late.
Without the threat of serious jail time & loss of their wealth; these companies will not change their philosophy of break the law first, worry about consequences if they ever get caught later.
As AZ’s Brennan likes to tout in interviews. It’s about trust! I don’t see any trust being built what so ever. Just the same old criminal business as usual.
Insider
About time, everyone knew that Forest was off the map in their marketing of products. I am sure there managemnt did as well. Keep up the good work, prosecutors. Your basically being ignored so far.
Experienced
To all those applauding this action, how about a dose of reality. Here you have the government taking criminal enforcement actions (basically debarring an individual for life from their sole area of expertise - think barring a PhD scientist from practicing science) against an individual that has never been convicted, indicted, accused or even shown to have direct knowledge of a crime. That is wrong. If you can take your juvenile “I hate pharma” goggles off for a moment and dispense with your “anti-pharma” talking points, how about we provide a little analogy that may be on a low enough grade level for you to understand. This is analogous to your neighbor being convicted of a crime. You and the other folks on the block had no knowledge of the criminal activity, nor participated in it. Yet the government, after convicting your neighbor, decides that based on your proximity to your neighbor, you and your fellow neighbors are banned from home ownership. Have a problem with that? I thought so.
Let’s add a little more prospective from someone who has experience in these matters (obviously none of the posters do). The whole concept of off-label promotion and these large government settlements are nothing more than a very lucrative government extortion scheme. Basically, the government shows up to big pharma, accuses them of various “crimes” (mainly strict liability misdemeanors under FDA law - that’s right, lower than a DWI or being caught with a bag of pot) and says that if you do not pay up, we will take you to court, acquire a conviction (because it is strict liability, the hurdles are very low) and the company will automatically be excluded from Federal Health Programs (basically eliminate all Medicare, Medicaid, VA and State/Federal Medical Coverage from drug product sales). This risk is too big to take. Further, the government are not “nice” or “fair” when they go about the process (the DOJ makes the IRS look like Mother Theresa) and will threaten individuals personally and to “bankrupt” the company (what do they care, they are government employees) if the company does not settle. This has become a major revenue producer for various States. Don’t believe me, look at Author Anderson. Remember them. The DoJ destroyed them solely for the crime of “fighting back”. 70,000 jobs eliminated. In the end, AA was acquitted of all accusations. However, AA is still dead, 70,000 innocent people will never have their lives back and the DoJ thugs just move on to the next case without any ramifications or accountability for their actions. This could just as well happen to Pfizer or Merck. Your tax dollars at work.
I would suggest you do your homework before you pontificate.
Insider
Dear Experienced, It is a little more serious then what you suggest. THey are actually doing all kinds of illegal marketing after agreeing to a package insert. Fabrication of Medical and drug information requests for off-lable material is suppose to be a CLass 1 felony. I don’t no where you got your information from but the proboem is a whole lot more serious then you suggest. Actually the feds seem to just go after the low hanging fruit so they pretty much really have a case if the pharma company settles. What about the whistle blowers asked to provide the companies legal department information and then fired afterwords never to work in the field again, blackballed for ever. THe information I saw was so good, the executives I showed the info to said they would have fired all the managers. Some of these companies are operating over the line all the time, that is why the fines are large. THe prosecuters seem to be over reasonable and they only recover part of the bounty the company made off of the fraud
Experienced
Insider:
You speak of rumors. I gave you facts. The office of the propaganda minister at DoJ would be ecstatic with your loyalty (so also, the NY Times).
As to your allegation of fabrication of MIR requests, the only way such a situation would be known by senior managers or executive management is if this activity was identified during an internal audit (which most companies do annually). Such behavior is typically the stupid activity of a rouge sales rep, not a strategic marketing policy. When caught, such reps are filed quickly (then file wrongful termination actions for being instructed to promote off-label, gender discrimination, etc. - you get the idea). Senior managers in this business are not that stupid to condone or instruct reps to engage in such activity. First, the value return would be low. Second, you don’t become a senior executive by being reckless and stupid. I know that is common opinion within the rank and file, but the reality is quite opposite. I also am quite confident your example does qualify as a Class 1 felony. Some more free education. The large damage settlements are not actually for off-label promotion. Believe it or not, there is really no financial penalty for OL promotion and it is questionable if the theory would ever withstand legal challenge, as the stretch is to pull the allegation under FDA statutes relating to misbranding. The fines arise from false claims. Not false claims regarding what the drug does or does not do (remember, the government is not interested in patient safety here, none of these cases are about patient safety, just money), but false reimbursement claims that would not have been submitted to a government insurance entity but for the alleged off-label promotion. This is also a bit of a legal stretch, as the False Claims Act pertains to acts of actual and intentional fraud against the US Gov’t, which is not actually occurring directly in the off-label promotion situation. The legal linkage is quite nebulous and thus the desire for the DoJ to never see a courtroom to test these theories, but rather to use the extreme power of government office to force a settlement. If you have ever be a target of a government investigation, you would understand the meaning of this power. The government does not have to play by the rules, nor are they generally accountable for inappropriate prosecution (the NY Times would agree with me on that point).
Cynic
Experienced, your comments are interesting and give some partial insight as to why the DOJ has not, to date, gone after individuals. Yet the depth of information in the internal documents of both Lilly and Astra Zeneca makes it eqully clear that a hands-off policy is in effect.
Add to the above the testimony of whistleblowers and there is ample evidence to go after individuals. It’s just not happening and we both know why.
AnnePME
Ed, thank you very much for posting this.
James Pricer
This is good news. I hope it doesn’t just mean that Solomon and Forest Pharm didn’t make their monthly kickback payment to the politicians. I guess we will now if and when more of these criminals are busted.
James Pricer
ThePsychReport.com
Max
Howard Solomon is a crook ask the former Financial Director Ken Goodman and as for appointing his son David Solomon as head of coporate development that’s a joke !
Ask what he got up to in Ireland ??
Max
Amazed
I was just looking for the doctor payment disclosures Forest was supposed to publish in January according to propublica and find this.
As long as corporations have the rights of citizens BUT none of the responsibilities these things will continue. Barring a CEO from his work for life is NOTHING for all the suicides and other deaths associated with these drugs. I could live very nicely with 2 percent of his take home for the rest of my life, I have no sympathy for an industry that has bankrupted out medical system and given us more illness for their profits.
Max
Ask him about Robin Burrows and David Alfrey in the UK.
He should know better with a son like crazy Andrew.
Max
Experienced
Cynic/Insider:
Don’t misunderstand me, there are some instances where senior management was involved in some inappropriate behavior that was clearly in need of punishment (KV Pharma, BMS, InterMune), but the key here is the concept of criminally punishing someone who was not directly related to a crime. That is wrong. Every poster has an interest in the government not taking such a position, regardless of whether the target is a sleeze ball or not. Even a murder conviction requiring a knowledge requirement and direct evidence. You simply cannot make an individual subject to criminal liability for criminal activity in which (i) they did not directly play a roll, or (ii) where they had no direct (or indirect) knowledge of the criminal activity. Otherwise, it may as well be a witch hunt and a lynching. Let’s use another analogy for those who can’t see past their hatred of the pharmaceutical industry. Take for example the President, his Cabinet, a Senator or even a State Attorney General. These individuals possess large staffs of varying responsibility engaging in a vast array of activity for which these leaders have no direct knowledge. Pretend that one of these staff members is falsifying documents or engaging in some other type of inappropriate behavior for which the political members have no direct knowledge. Should these leaders be held criminally liable and banned from politics?
Happens all the time, but they are never held liable. Why should US citizens be held to a different legal standard?
The rumor is that the reason DoJ/HHS are now trying to hold individuals responsible is because these “extortion” schemes shrouded in off-label allegations are being called into question by Congress. For “cover”, DoJ/HHS are trying to produce “heads” to show there is really some type of “criminal activity” that justifies these large, punitive financial settlements. For every multi-billion or multi-million dollar settlement makes a great headline, there is a city (e.g., Indianapolis), that is going to immediately suffer a negative impact within it’s job market. These settlements hit the bottom line and are the cause of many of the layoffs big pharma has been forced to commit in the past few years. No one knows what the state and federal government do with the money, but they are not replacing the jobs. When pharma starts moving off-shore, you can continue to celebrate. What you have here is a very large transfer of wealth from private industry to government via the DoJ. Yet I can’t recall a single instance were an individual or entity was convicted of criminal activity before a jury of peers. Can you?
Max
Ask him about Andrew and who paid for Althorp House ???
industry insider
Howard Solomon has dedicated his professional and personal life to the treatment of patients with mental illness. Read this touching story for those of you who denigrate this man in such a damnable manner.
http://www.businessweek.com/magazine/content/02_21/b3784001.htm
marcy stone
I’m surprised Forest is still in business –years ago I figured it wouldn’t last six months.
Interesting that they’re in (or used to be in don’t know now) the same neighborhood as Bernie Madoff. The big difference is that Madoff only stole money, the Solomon’s of the world endanger the public health.
Give me a break, industry insider –I cannot believe that anyone at the helm of such an irresponsible pharmaceutical company helped anyone at all without some sort of evil hidden agenda.
MsPiggy
Let me get this right! Your defense for Solomon is his dedication to making billions off the suffering of others by pimping ineffective medications illegally & off label.
I sure there are some that could also make a case for how dedicated to their cause Charles Manson, John Wayne Gacy, and even Hitler were; able to excuse their committed monstrosities with some personal selective cherry picking.
I don’t buy the tainted bill of goods your selling quite frankly…
This is Solomon’s company that committed crimes, he is in charge & has professional/legal responsibility to know what going on with Forest (There is little doubt he knew exactly what was going on).
You would have to be living in a deep hole wearing blinders to be CEO and not know what your rampant out of control illegal company policies were & are.
The only injustice here is that the DOJ let Forest & Solomon off with another one of those profitable cost of doing business fines.
Solomon shouldn’t be facing a tushy massage with a ban from Medicaid/Medicare; he should be in prison for a very long time. He also should ridiculed/denigrated publicly as a living & relevant example of what damage a huge out of control corporate CEO ego can inflict on public health.
industry insider
“At no time during the government’s six year investigation of Forest was Mr. Solomon ever accused of any wrongdoing in connection with the matters settled in 2010. We are hopeful that HHS-OIG will decide that the facts and circumstances as to Mr. Solomon do not warrant an exercise of its exclusion authority.”
Don’t waste your antipathy. Save it for Weldon or someone else. As long as the Board backs Solomon he’s in like flint.
AC Walker
“Max,” you have crossed a line by continually referring to Solomon’s son, Andrew, and his battles with depression, which he has been candid about. Calling him “Crazy Andrew” when depression is a disease that affects millions of otherwise “normal” people is absolutely cruel, and more importantly, has nothing at all to do with the topic at hand. You should only be so lucky never to have to suffer as those with depression and those who support deppressives have to.
industry insider
Agree 100% with AC. If you’ve worked in the area of psychopharmacologic drugs or have experienced or had a friend or relative who has experienced major depression you will develop a natural empathy for Mr. Solomon’s struggles with his son, and their fight together. People like Max and others on these boards have neither the professional nor personal capacity for empathy or insight, and are probably not worth the benefit of your’s and my keystrokes to elaborate further on their bilious rantings.
Max
Solomon is finished at 82 he hould have packed it in years ago,past his sell by date should go and do what Tea Pots do and retire to Florida !
Have A Nice Day
Max
industry insider
Solomon is laughing all the way to the Bank of Florida. Have a nice day, Max.
http://www.reuters.com/article/2011/04/19/us-forestlabs-idUSTRE73I2LT20110419
Max
All the way to Jail more like ! and at 82 years old I would hardly think that he is interested in money but then he is a tea pot lid.
Americans are so stupid.
Have nice day missing you already kid.
Max
industry insider
Timely comment with the Passover holiday, Max. Just so the rest the posters on these board know your bias, Max, the expression “tea pod lid” is gutter Cockney slang for “yid”, a derogatory term for a Jew. Since Solomon is Jewish, that makes you an anti-semite,and you should make your exit from Pharmalot post haste. No room for bigots on these boards.
Ed Silverman
Hello Max,
I’ve noticed your comments and believe I should explain my philosophy about Pharmalot.
The comments section is a bit like a large garden party, where folks are free to flit from group to group, joining in conversation as they see fit.
However, inappropriate language is considered the equivalent of throwing a wine glass or chair. Your last remark crossed a line.
So I would urge you to please stick to the topics at hand and speak to others as you would like to be spoken to. Slurs are not welcome here.
Regards
Ed
Max
It is not derogatory it is as you say rhyming
slang and is part of the London dialect.
What is passover ?
Do you mean Easter ? you see insider it’s all a question of word usage and interpretation.
Anyway Howie’s off to Jail with luck.
Have a nice day ya allI off to get a few bottles of wine to celebrate atheism.
Happy Easter.
Max
industry insider
Max is not fooling anybody. For one time use and for educational purposes, here is the dictionary definition of “tea pot lid”:
http://www.cockneyrhymingslang.co.uk/slang/tea_pot_lid
Max
Have a Good Friday dictionary definitions indeed.
Your Buddy
Max
Max
Give us a dictionary definition of Septic Tank
Regards
Limey Bastard
Justice
This company are full of corruption, underhandedness, and its about time they were exposed for who they are, excellent work to all involved. The company have recently been issued with legal proceedings for discriminating against an ill employee who suffers with depression, and injuries caused by the company’s corrupt management. Justice for people against this nasty company
Leftthatpharma
Do not get me going on what goes on beyond emails and behind closed doors with these companies. But it’s not just pharma, it’s banking, insurance companies, medical device companies, etc. Pharma just happens to be a hot topic because it deals with ingested chemicals that Drs. prescribe too much of and patients and payers, Pay way too much for.
Our system is broken and no, Greed is not good in this industry. We will all be patients some day. Problem is that the Law Makers in our company have and will retire with the best Insurance in the World: Blue Cross Blue Shield Federal. No denials and a sweet Cadillac Plan which costs tax payers a lot of money.
Gassa
So, some of you think it’s ok to use racial and ethnic slurs and make fun of folks with a mental illness? And to think you get a free pass for this by using Cockney slang?
industry insider
Well said, Gassa. Max has been appropriately admonished, and I doubt we will encounter him again, unless you happen to encounter him in a seedy pub in the east end of London.