Thursday, May 03, 2007

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.


Anonymous said...

To get the top dogs, they have to be brought before the jury with the proper evidence that they were involved in the whole process of misconduct. They are involved and the proof is there but is hard to produce. The CEO and others at the top of big pharma food chain know how to protect themselves so it looks as they are not part of the misconduct. The truth is that every CEO in every big pharma knows what is going on and approves it directly or indirectly.
For instance, I was at a national sales meeting, where the details of fake post marketing surveliance trial were presented, with CEO and all the other top dogs in the room. They were there, they appreoved it and they knew it was aginst federal laws and the company's own code od conduct. Yet it went ahead, brought in millions and millions of extra dollars in sales of the "trial" drug, while defrouding all provincial drug plans (Canada).The fake trial was dropped when there was a case of whistleblowing internally. The whole thing was covered up and life went on with new and improved post marketing trial. That is how they work, the mob has nothing on these cats.

Peter Rost said...

Yep. That's how it works. And the merry carousel keeps spinning.

Anonymous said...

I worked with these people and from what I remeber there was another defendant Ellen Frank. I think she becane seriously ill. These people were in charge of the fraud that started when Serostim sales started to tank. i was originally for AIDS wasting and when that stopped happening in a noticable way they faked a BIA test and had reps pretending ot be clinicians. I remember the emails where you had to write in every day telling how many new scripts you had generated. We were told to award physicians with BIA testing equipment if they put ten patients on Serostim. In NJ a physician was caught prescribing Serostim to homeless patients who never got the drug. In Chicago the methodone clinic/ AIDS clinic was a warehouse for Serostim. This was at a cost of 23,000 per 3 months with a percentage of the money going back to phamacists and doctors. It was abig scam and these four people were the leaders of the pack for the fraud unfortunately the government didn't use much of this better luck next time...

Anonymous said...

A lot has been said and done and the "merry carousel keeps spinning" in the Bigpharmaland. No one person can bring them down but we as a group as people CAN and I believe we WILL. The US authority to be fair are doing better job then most other countries' authorities, although it is still not enough. The big pharma still does not hurt, they pay up and go on with thier nasty business. If they do it in US with such strong laws immagne what they do in Canada for instance where you have almost no laws to deal with these issues. Same in other countries. The doc had the example from Sweden where Novartis got some mild reprimend and the bosses blamed the internal mismanagment or lack of communication or some such thing. They got away and for sure are doing it again with new and improved nasty stuff. "Catch me if you can" is their motto and if you do, so what. "We are the big pharma and your very life depends on us. See if you will have the same opinion of us when you get sick or your little daughter gets sick and needs our antibiotic?"
This is powerful stuff in their favour and that is one of the main reasons WHY they do what they do and get away with it.
Our little group north of your border is doing something to change thigs around, here first and hopefully and beyond. We have the story, we have the documantation and we have the will. The question is wheather we will find the will amongst the media, publishers and/or authorities. If all of these will have no will the Big pharma will win again and the merry go around will continue to spin in the BIGPHARMALAND.