Biotech CEO Is Fighting Exclusion by DHHS

Biotech CEO Is Fighting Exclusion by DHHS

September 14th, 2012 // 6:01 pm @ jmpickett

Yet another pharmaceutical industry executive is fighting a move by the US Department of Health & Human Services to exclude him from participating in federal healthcare programs. The latest to go to court is W. Scott Harkonen, who once headed InterMune and was sentenced earlier this year for wire fraud in connection with disseminating false and misleading statements about the results of a clinical trial of the Actimmune drug.

Last year, Harkonen was excluded for a five-year period as the result of a conviction in a September 2009 trial and was later sentenced last to three yeas’ probation, six months of home confinement, a $20,000 fine and 200 hours of community service read the (HHS letter and administrative decision). During his tenure, which ended in 2003, he was accused of making up details about how effective the Actimmune medication was in combating a fatal lung disease known as idiopathic pulmonary fibrosis, or IPF.

The exclusion marked one of the few instances in which the feds have moved to ban a top pharma or biotech exec from participating in federal healthcare programs. The feds have repeatedly signaled an intention to make examples of the c suite in response to various infractions, but there have been relatively few examples, although a federal appeals court recently upheld the exclusion of several former Purdue Pharma execs for misbranding OxyContin (read here).

As reported previously, Harkonen was charged with orchestrating an off-label marketing scheme for Actimmune (back story). A press release he wrote touting the benefits of Actimmune to treat IPF in August 2002 was at the heart of the government’s case. Although the clinical trial failed, the press release stated that a sub-analysis showed the drug helped IPF patients live longer, and many docs wrote scrips even though Actimmune wasn’t approved for that disease.

Harkonen, however, believes the HHS Office of Inspector General erred in pursuing exclusion. In an appeal filed this summer, he argues that the wire fraud conviction did not have a connection to delivery of healthcare item or services, which was a prerequisite to exclusion, on the grounds that he intended the statements in the press release to affect Actimmune sales, according to his brief (read here).

The HHS OIG “based this claim principally on unproven allegations of the indictment relating to a misbranding count of which the jury acquitted Harkonen.” And an administrative law judge then “erroneously found that standard was met by a purely hypothetical ‘potential impact,’ speculation that the (press release) could have caused a physician to prescribe Actimmune, notwithstanding the lack of any evidence that any physicians wrote prescriptions…”

The administrative law judge, he argues, “assumed that a ‘potential impact’ might occur multiple links down a speculative causal chain. The press release announced the results of a clinical drug trial through a news wire that transmitted the release to the general public. The press release did not propose any transaction to deliver Actimmune, and it was not directed to patients, physicians, or insurers.” In other words, the release was intended for investors.

Not surprisingly, the HHS OIG in its recent response filed in court, disagrees. Harkonen, the OIG writes, “asserts that his crime was not in connection with the delivery of a healthcare item or service because the I.G. did not prove that the press release actually induced a specific physician to prescribe Actimmune. Appellant’s argument is based on a misunderstanding of the well-established requirements” of the law (here is the OIG brief).

“The exclusion statute does not require a direct connection between the conviction and the delivery of a specific health care item or service, but instead requires a ‘nexus’ or ‘common sense analysis’ of whether the offense had a connection with the delivery of a healthcare item or service. Instead, the OIG argues that the judge correctly interpreted the phrase ‘in connection with’ to have the same meaning as ‘related to’” delivery.

Of course, whether Harkonen will prevails remains to be seen. But he is fighting a related battle in another court over the episode. Last November, he also appealed his conviction and is seeking a new trial. In his brief filed with a federal appeals court, he is attempting to turn his case into yet another alleged instance in which the First Amendment and commercial speech – as practiced by a pharmaceutical company – have been trampled by federal prosecution.

As we reported previously, his lawyer wrote in their brief that, “in prosecuting this case, the government crossed a line into criminalizing scientific opinions that it never has been permitted to cross. More than a century ago, the Supreme Court held that the federal fraud statutes do not permit the government to prosecute individuals for expressing scientific opinions about which reasonable minds can differ.”

To Harkonen, the case is about a willingness to look beyond strict statistical significance in order to recognize perceived value in scientific debate over study results. Specifically, his legal team points to the extent to which the feds relied upon the so-called ‘p value,’ a key probability measurement, in arguing that Harkonen distorted the results of the clinical trial as discussed in the press release for his own ends.

His lawyers maintain the feds overstated the virtues of relying on the so-called p-value to discuss the full measurem of benefits that were parsed from the clinical trial. In their view, the sub-group analysis offered an additional way to assess the benefit that Actimmune offered, and this approach constituted a legitimate scientific difference of opinion.

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