Ex-FDA Chemist Debarred for Huge Insider Trading Scandal
March 7th, 2013 // 1:20 pm @ marquee
The $50,000 FDA 483 Response Mistake – Happens All the Time!
Two years ago, FDA chemist Cheng Yi Liang was arrested for using confidential information about upcoming announcements of 27 different approval decisions involving 19 publicly traded companies over a five-year period. In the process, he generated more than $3.7 million in illegal profits for himself. Last year, he was sentenced to five years in prison for insider trading. And now, to close the loop, he has been debarred.
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What exactly does this mean? Liang is permanently banned from providing services in any capacity to a person that has an approved or pending drug product application. And if he provides services to anyone with an approved or pending drug product application, he will be subject to civil money penalties, according to the Federal Register notice published this week.
There are also consequences, though, for those who do business with him. Anyone who “knowingly employs or retains†Liang as a consultant or contractor, or otherwise uses his services in any capacity, can also expect to be fined. Nor will the FDA not accept or review any abbreviated new drug applications submitted by Liang or with his assistance.
There is nothing surprising about is debarment, of course. This was a highly embarrassing episode for the FDA, and cast an unflattering and unwelcome spotlight on the sanctity of agency deliberations. The prison term and debarment are, naturally, a way of serving notice to other FDA staffers who wish to take advantage of the approval system, as well as skeptical investors who believe the agency leaks like a sieve.
The problem extends beyond the agency, though. More than one in five US insider-trading cases involved health-care stocks, and since 2007, 97 people charged or sued by regulators for insider trading gained an edge thanks to secret info about drugs and devices, according to Bloomberg News. Execs at several drugmakers have been caught in recent years, as well as a former University of Michigan Alzheimer’s expert who sold tips to a consulting firm (read more here).
As we wrote previously, Liang joined the FDA in 1996, working in the Office of New Drug Quality Assessment in the Center For Drug Evaluation & Research, and gathered info about New Drug Applications from the FDA’s Document Archiving, Reporting and Regulatory Tracking System. His illicit trades began in 2006 with seven brokerage accounts, six of which were listed in names of other people, including his 25-year-old son, who was also charged.
And in case you were wondering, he traded in these stocks: Adolor, Anesiva, Connetics, Cornerstone Therapeutics, CV Therapeutics, Encysive Pharmaceuticals, EPIX Pharmaceuticals, MannKind, Middlebrook Pharmaceuticals, Momenta Pharmaceuticals, Novadel Pharmaceuticals, Pharmacyclics, Pozen, Progenics Pharmaceuticals, Santarus, Somaxon Pharmaceuticals, Spectrum Pharmaceuticals and Vanda Pharmaceuticals (look at this chart).
H/T – Pharamlot
The $50,000 FDA 483 Response Mistake – Happens All the Time!
