How the Feds Fumbled the Largest Illegal Steroid Case in U.S. History
The feds have been talking a lot recently about imposing stricter punishments on drug company executives who promote drugs illegally, from prison sentences to removing CEOs from their jobs to forcing sales of errant business units and banning individuals from doing business with medicaid and Medicare.
Don't believe a word of it. It's all bunk, if the Department of Justice's actions are any guide.
The DOJ was given the perfect opportunity to send a strong signal about its new get-tough attitude in the case of GeneScience CEO Lei Jin, who just pleaded guilty to selling his brand of human growth hormone, Jintropin. (All HGH products end in the suffix "-tropin" so Jin appears to have named it after himself.)
Jin was indicted under 21 USC § 333(e), which specifically bans the unregulated sale of HGH. The penalty is five years in prison or 10 years if the recipient is under 18 years old. You can read a summary of the law on the DOJ and the FDA's own web sites. In fact, prosecuting HGH sellers is especially easy for the DOJ because the standard of proof is lower, as the DOJ''s page notes:
... the mens rea requirement for a felony is "knowing distribution" or "knowing possession with intent to distribute," not "intent to defraud or mislead."Prosecutors should have knocked Jin out of the park. Instead, they bunted. Jin pled guilty to a misdemeanor and must forfeit $4.5 million in cash plus $3 million in lieu of community service. This is the pathetic result of what the DOJ once heralded as "the largest steroid enforcement action in U.S. history."
Compare that action to the way federal officials responsible for investigating drug companies talk about what they're doing. Asst. Attorney General Lanny Breuer warned in 2009 that the DOJ was ramping up the "prosecution of senior executives."
Lewis Morris, chief lawyer at the US Department of Health and Human Services, told the British Medical Journal recently that he would bring cases in which companies would be forced to sell entire business units if they were caught selling unapproved off-label drugs:
"In the drug industry we have a case that is moving to final resolution where we are going to be requiring a subsidiary, and all its assets, to be sold off to a third party," he says. "The parent company can no longer own that part of the company."He also said he wants to strip CEOs of their jobs:
"This responsible corporate official doctrine will allow us to go to a chief executive and say 'I don't even need to have proof that you specifically hatched this scheme. You could have stopped it. You had the responsibility and the authority to stop it and you didn't, so you have to leave the company."So far, only CEO Michael Friedman of Purdue Pharma, which ravaged Appalachia and the Midwest with its promotion of OxyContin, has actually lost his job. And he's appealing that.
As for the rest of Breuer and Morris' big plans -- they're nowhere to be seen. Check out this timeline of recent Big Pharma settlements with the DOJ. In none of those cases have senior executives been held accountable. In the Pfizer (PFE) case -- where the company paid $2.3 billion for mismarketing the painkiller Bextra -- two low-level salespersons were prosecuted as individuals.
Why so feeble? Because, as Morris admitted to the New York Times recently, some companies are "too big to debar." They cannot be removed from doing business with the government because Medicare and Medicaid need their drugs.
This perversion of incentives -- in which big drug companies actually have federal insurance against serious consequences for breaking the law -- reached its most disappointing low with the Allergan (AGN) case, in which the company paid $600 million to settle claims about its blatant off-label promotion of Botox. A Department of Health & Human Services' Office of Inspector General spokesperson explained to Pharmalot why Allergan had not been excluded from doing business with its programs:
Excluding Allergan would mean that Medicare, Medicaid, and other Federal health care programs would not pay for Allergan's drugs. And that would have a huge impact on many of our beneficiaries.That's right: the feds actually rewarded Allergan with their continued business for illegally pretending that Botox cures headaches, instead of punishing the company.
A House of Representatives' bill may toughen the law if passed by banning individual executives from doing business with the government if they're convicted of these types of crimes. But don't hold your breath for that.
Related:
- Does Your Company Pay Bribes in Foreign Countries? Now There's an App for That!
- Memo to the DOJ: Pfizer Isn't "Too Big to Nail" -- Don't Let Management Off the Hook
- Fines Haven't Stopped Drug Company Lawbreaking -- Maybe Jail Time for Executives Would
- Crime Pays: How Allergan's Illegal Botox Promotion Is Just the Cost of Doing Business
- Federal Prosecutor Warns Drug Companies on Off-Label Promotion: "This Must Stop"