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Amgen in Criminal Probe Over $1.5M Gift That Allegedly Supressed Witness Testimony

By Jim Edwards

Updated on: June 17, 2011 / 1:19 PM EDT / MoneyWatch

Amgen (AMGN) has failed in an attempt to restrict an investigation by prosecutors holding criminal grand jury hearings into the contents of several employee whistleblower cases, including one which alleges Amgen paid $1.5 million to suppress testimony at a trial which established the company's patent rights to Epogen, a kidney drug. The federal court ruling allows prosecutors to continue talking to past and current Amgen employees without management's permission. Epogen, which treats anemia in kidney dialysis patients, made $2.5 billion for Amgen in 2010.

The ruling is a disaster for Amgen CEO Kevin Sharer, whose company has long sought to keep secret the complaints of its current and former employees.

Amgen uses binding arbitration contracts with its workers to prevent them from using the federal courts to sue if they believe the company has broken the law. In the last few years, a handful of those cases have landed in federal court anyway. Three cases allege that Amgen sales reps have rifled through confidential medical records looking for potential new patients for its products; and several allege that former sales reps and other executives believe Amgen is giving kickbacks to doctors to prescribe its drugs. Five former Amgen employees asserted their Fifth Amendment rights against self-incrimination in the latter case.

Who invented Epogen?
The allegation of the $1.5 million payment came in a dismissed whistleblower lawsuit filed by Darrell Dotson, an in-house patent litigation attorney at Amgen. He alleges that when Amgen went to trial against Roche in 2007 over the ownership of the patent rights to Epogen, Amgen's lawyers agreed to give a $1.5 million endowment to the University of Washington, creating the Joseph W. Eschbach Endowed Chair in Kidney Research at the university's Division of Nephrology. The endowment was in recognition of development work on Epogen done by Dr. Eugene Goldwasser, who originally isolated the proteins that led to the invention of Epogen. The endowment, Dotson alleges, satisfied two other academic witnesses in the case who felt that "Goldwasser had gotten screwed by Amgen." Amgen maintained at trial that the sole owner of the Epogen patent was one of its own employees, Dr. Fu-Quen Lin.

Dotson claims he confronted Amgen's lawyers during the trial to ask why they had donated such a large sum. One asked Dotson if it made any difference if "it was an endowed chair, not a payment to Goldwasser?"

With the endowment in place, Dotson alleges, witness testimony by Goldwasser's colleagues helped convince a jury that Lin and Amgen indeed owned the Epogen patent. Goldwasser died in 2010. The Dotson case was voluntarily dismissed without prejudice, meaning he has the right to refile it in the future.

Probe ongoing since 2006
The new court ruling reveals that the Eastern District of New York's U.S. Attorney's office has been conducting a criminal probe of Amgen since 2006. Amgen initially cooperated with five subpoenas featuring 90 requests for information, gave the feds 3.5 million pages of documents and responded to numerous other informal requests for information, according to a preliminary ruling in the case.

But then prosecutors began contacting Amgen employees privately at their homes. Amgen, believing prosecutors had broken the "no contact" rule which bans lawyers from contacting directly clients who have their own lawyers, sought to prevent the interviews.

The judge ruled the visits were legitimate, and in so doing allowed prosecutors' grand jury investigation to proceed. The feds have also shown interest in a case filed by former Amgen pharmacist Kassie Westmoreland and one from former Amgen senior project manager Shawn O'Brien.

The only good news for Amgen here is that the criminal case is probably years away from resolution. But if it turns up evidence that Dotson's allegations are true, it could double Amgen's normal liability: Roche, undoubtedly, would seek to return to court to appeal a verdict it could argue was tainted.

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