DOJ Boston: Big settlements. Few convictions.
The DOJ Healthcare fraud unit in Boston has a great track record making big pharma pay big bucks. But they've failed miserably, over and over, getting convictions for the executives they've charged.
In 2005 Serono agreed to pay a $704 million fine and pled guilty to two counts of conspiracy to resolve criminal and civil charges related to the marketing of Serostim.
Today, four former former Serono sales and marketing executives, Vice President Marketing, John Bruens, 48 years old, of San Diego; Vice President Sales, Mary Stewart, 44, of North Andover, Mass; Regional Sales Director Melissa Vaughn, 43, of Louisville, Colorado; and Regional Sales Director Marc Sirockman, 41, of Flemington, N.J. were all found not guilty by a federal court jury of charges they offered bribes to doctors in exchange for writing prescriptions for an AIDS drug sold by the company.
One former employee, Adam Stupak, 40, of Hewlett, N.Y., the company's Regional Sales Director in New York City, pleaded guilty in December 2004 to offering illegal remunerations to three doctors. Mr. Stupak also agreed to cooperate in the government's investigation. It is possible this plea will now be thrown out.
The jury returned the not guilty verdicts after deliberating for only three hours. That indicates the jury just didn't believe in the DOJ case right off the bat.
The indictment claimed that the employees were part of a scheme to offer bribes to doctors to get them to prescribe Serono's AIDS-wasting drug, Serostim. Among the alleged inducements offered to doctors was an all-expenses paid trip to Cannes, France, in 1999.
The lead attorney on the defense team, Tracy Miner, also achieved a victory two years ago in a similar case involving TAP Pharmaceuticals. Mintz Levin attorneys successfully argued for acquittal of their client, Janice Swirski, formerly a national accounts manager with TAP Pharmaceuticals. The three-month trial in Boston's Federal District Court concluded when Judge Woodlock sided with Mintz Levin attorney Tracy Miner who argued that the anti-kickback laws did not apply to her client. TAP pleaded guilty and paid $880 million in penalties.
Here's a link to the government's Serono indictment.
Conclusion from my perspective:
Jurys have a very hard time agreeing to convict mid-level executives, when they know the big guys are walking away untouched.
Clearly the government had a good case, otherwise those companies wouldn't have forked over close to a billion dollars.
So I guess jury's have a hard time believing that violations resulting in $700 million to $900 million fines are hatched on a director/VP level in the organization.
Problem is getting to the big guys, the CEO, the Group VPs, the Senior VPs, since they are shielded by their distance to the action.
Generals are rarely harmed in any war. The foot-soldiers and the commanders on the front-line are the ones getting killed.