Four years after pleading guilty to a criminal misdemeanor in connection with the misbranding of the OxyContin painkiller, three former Purdue execs are fighting a court ruling that upheld a decision by the US Department of Health & Human Services to bar them from working for any company that does business with Medicare, Medicaid and other federal health care programs for 12 years.

After losing that court battle last December, Michael Friedman, the former ceo and president; Howard Udell, the former exec vp and general counsel; and Paul Goldenheim, the former chief medical officer and R&D chief, are now asking a federal appeals court to overturn the decision (which you can read here). But in a brief filed last month, the HHS is adamant that its intepretation of the law - and rationale for imposing its penalty - are sound.

For those who may not recall, the government claimed Purdue Frederick, a subsidiary of Purdue Pharma, misled patients, regulators and doctors about the addictive risks. In 2007, the subsidiary pled guilty to felony misbranding as part of a settlement and was automatically debarred from winning new government contracts. The parent company, which avoided criminal charges by striking a so-called nonprosecution agreement and paying $600 million in fines, was allowed to pursue contracts.

Meanwhile, the three former execs were ordered to disgorge a total of $34 million, although the drugmaker actually paid this amount, while the trio avoided jail time. The former execs later argued, however, 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, which was reduced from 20 years, was unreasonable.

And so the appeals court will be reviewing the extent to which they were ‘responsible corporate officers,’ 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. The HHS notes in its brief that the concept is not predicated on direct involvement in the misbranding, awareness of wrongdoing or ‘conscious fraud.’

For good measure, the HHS adds each Purdue exec “admitted having responsibility and authority either to prevent…or to promptly correct the false and misleading representations concerning OxyContin, and that, as a responsible corporate officer…he failed to meet those responsibilities.” The HHS also repeats a line written by US District Court Judge last December: by describing themselves as innocent third parties, the execs offered a “fundamental misconception” of their plea agreements.

In summing up its argument, the HHS then concludes by writing that “the length of the exclusion matches the sweeping and unprecedented nature of Purdue’s fraudulent misbranding. To the extent they deem it onerous, the Purdue executives have only themselves to blame for the scope and gravity of their failure to exercise their executive responsibility” (you can read the HHS brief here).

In response, the former execs yesterday filed their own brief in which they maintain HHS “imposed an unprecedented period of exclusion that treated appellants more harshly for a single misdemeanor involving no conscious wrongdoing than individuals incarcerated for multiple felonies involving intentional misconduct.”

They also argue the HHS “insinuates” they must have known of the misconduct of others and describing their “lack of awareness” as “purported,” “professed” and “alleged.” These insinuations are entirely improper. Moreover, after reviewing millions of documents, the prosecutors could not prove the execs “knew about or recklessly or negligently ignored the misleading marketing of OxyContin.”

Moreover, they insist they are not subject to exclusion. Why? The language, grammar and structure in the exclusion statute states that it is the statutorily-defined “misdemeanor” to which they pleaded guilty that must “relate to” fraud or unlawful distribution, not the facts underlying their convictions, their brief states. And even if the court allows exclusion to stand, they argue that 12 years is too long. Exclusions based on misdemeanor under the law “are wholly unprecedented and cannot be justified by HHS’s inapposite comparisons to mandatory exclusions involving intentional felonies.”

“This harsh penalty,” the brief states, “is an unreasonable departure from precedent, based upon an erroneous analysis of aggravating and mitigating factors.” And to sum it up, they argue: “HHS erred by construing its regulation to exclude the obviously relevant fact that appellants engaged in no conscious wrongdoing. And it effectively negated appellants’ substantial cooperation efforts and disregarded entirely their voluntary efforts to prevent OxyContin diversion. The decision must be reversed” (here is the brief filed by the execs).

Oral arguments are set for December. So the final word has not yet been lodged. The execs, of course, are free to fight the court ruling and even if they come up short, may well make a cogent case that the HHS was incorrect in applying the law, or perhaps, that a 12-year exclusion is simply excessive. Nonetheless, they did plead guilty to misbranding. And the HHS does make a point - as have others - that execs need to take responsibility for what takes place on their watch. After all, they are generally rewarded handsomely when things go well. And so, a few questions are in play - Should the court confirm the ban? If not, why not? And if so, should the execs be banned for 12 years, or something less than that? What do you think?

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