Indicted Glaxo Lawyer's Choice: Cooperate With Feds or Stay Silent

Last Updated Nov 10, 2010 10:56 AM EST

A vp/associate general counsel at GlaxoSmithKline (GSK) was indicted for lying to the FDA in a signal that the feds have finally begun their long-awaited quest to prosecute individual drug executives for wrongdoing in the drug business. Previously, prosecutors relied on multimillion dollar settlements in their attempts to discipline drug companies. Those settlements merely became part of Big Pharma's revenue model, however, so now they're going after management.

Prosecutors have started at Big Pharma's weakest point: GSK. The company recently settled a $750 million case in which the feds discovered workers at its Paxil factory in Puerto Rico were running a black market drugs operation, shipping contaminated or mixed-up pills, and filing reports in Spanish so that management couldn't understand them. The Paxil fiasco is still under scrutiny: Congress has demanded a probe of the FDA in Puerto Rico to understand why the agency was asleep at the wheel during the 10 years that the GSK facility ran of the rails. At the time of the Paxil settlement, the U.S. Attorney's Office in Boston said the Paxil probe was still "ongoing."

Which brings us to the accused GSK lawyer, Lauren Stevens, and what will happen next. Stevens has been indicted for alleged misstatements she made to the FDA about GSK's promotion of the antidepressant Wellbutrin. GSK paid 2,700 doctors to give promotional talks about the drug and Stevens knew 28 of them were using materials promoting illegal, "off-label" uses of the drug for purposes such as weight loss, the indictment claims. The probe began in 2002, according to page 144 of this GSK disclosure.

GSK says Stevens is now retired. The question is, What else does she know and will she tell the feds about it in exchange for leniency, or does the probe end here? The former scenario is being played out right now at Sequenom (SQNM), where the former R&D chief is cooperating with the SEC.

As Internet Drug News put it:

It's titillating she is a lawyer but the real take home point is that the US Attorney has indicted a former V.P. (She is retired). The shit is going to hit the fan when they offer her immunity to tell on her friends. (And you know she will because there is no parole in Federal prisons). Worst case scenario would be that she implicates her former compadres in a manner that morphs this headache into a full blown RICO case.
Related: Gavel image via Flickr user Thomas Roche, CC 2.0.