Forest Laboratories Inc. said that it was "gratified" by a decision by the Health and Human Services Office of the Inspector General (HHS-OIG) not to pursue a federal health care exclusion against Forest CEO Howard Solomon following the company's $313 million settlement with the Department of Justice over illegal marketing and distribution of some of its products.

Forest Laboratories Inc. said that it was "gratified" by a decision by the Health and Human Services Office of the Inspector General (HHS-OIG) not to pursue a federal health care exclusion against Forest CEO Howard Solomon following the company's $313 million settlement with the Department of Justice over illegal marketing and distribution of some of its products.

The HHS-OIG's threat to exclude the CEO would have prevented him from working in a company whose products are paid for through Medicare and Medicaid. Actions against company executives have been proposed as a way of giving teeth to laws prohibiting off-label promotion of drug products, but the move in this instance was criticized as being unfair given that Forest's settlement with the DOJ included no finding of knowledge of wrongdoing by Solomon. With the reversal of the HHS-OIG on Solomon's case, it is unclear whether the agency will use another company and executive as an example to the industry.

"We are pleased that OIG has decided to end its ill-advised effort to exclude Howard Solomon," Rich Samp, chief counsel for the Washington Legal Foundation, told BioWorld Today. "It never should have started down this path in the first place, but at least OIG eventually realized the error of its ways."

In September 2010, New York-based Forest pled guilty to charges that it obstructed justice, illegally distributed Levothyroid (levothyroxone) thyroid hormone and unlawfully marketed antidepressants Celexa (citalopram) and Lexapro (escitalopram) for use in children. (See BioWorld Today, Sept. 17, 2010.)

To settle the charges, the company agreed to make payments of $149 million plus interest to federal government and state Medicaid programs. In addition, to resolve the criminal investigation, it promised to pay a fine of $150 million, and a forfeiture payment of $14 million.

According to Samp, exclusion of individuals from health care plans on the basis of the OIG process sidesteps due process rights ensured by the U.S. constitution. "If HHS believes that Solomon acted wrongly, it should initiate civil or criminal proceedings and allow a court to sort through the evidence. But OIG exclusion proceedings are not an appropriate vehicle for making initial determinations regarding whether an individual acted wrongly. Exclusion proceedings do not provide for any sort of pre-enforcement hearings. Thus, in cases of this sort, the issue of wrongdoing has to be decided by OIG on the basis of correspondence, with no right to testify, no right to examine all the evidence upon with OIG may be relying and no right to confront and cross-examine any adverse witnesses."

Multimillion dollar settlements have become a routine expense of the drug business for many companies. The rogues gallery of drugmakers who have paid fines for illegal promotion includes Novartis AG, Pfizer Inc., Eli Lilly and Co., Allergan Inc., Astrazeneca plc and Bristol-Meyers Squibb Co.

In October 2010, Novartis agreed to plead guilty and pay a $185 million fine, plus $237.5 million in civil liabilities for off-label marketing of its antiseizure drug Trileptal (oxcarbazepine) and for payment of kickbacks to health care providers. Novartis previously paid $72.5 million to settle civil False Claims Act allegations of off-label promotion of TOBI, its cystic fibrosis drug. (See BioWorld Today, May 10, 2010, and Oct. 4, 2010.)

In 2009, Pfizer made the largest ever settlement of its kind by paying $2.3 billion to resolve charges of illegal off-label promotion of Bextra (valdecoxib). And Lilly incurred a $515 million criminal fine and up to $800 million in civil penalties for off-label promotion of Zyprexa (olanzapine) for indications such as Alzheimer's dementia.

In September 2010, Allergan paid $600 million in criminal and civil penalties for illegal promotion of Botox (onabotulinumtoxin A), and in 2007, Bristol Myers Squibb and affiliate Apothecon Inc. settled charges of paying kickbacks and illegal promotion of Abilify (aripiprazole) for $515 million.

Although Solomon was not the first CEO to be targeted by OIG, he was the first who had not been convicted of wrongdoing. Under the Social Security Act, HHS can exclude individuals or companies from future participation in Medicare and Medicaid programs if they have been convicted of charges related to "fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Owners can only be excluded if there is evidence that they knew or should have known about the activity. Corporate officers and managing employees can be excluded based solely on their position in the company. That is how Solomon ended up in the crosshairs.

At the time, he pointed out that numerous other major pharmaceutical companies have pled guilty to much more egregious offenses without incurring exclusion of senior executives.

The HHS did not explain why it chose Solomon, nor did it explain why it decided not to pursue exclusion after four months' consideration, except as follows in its written statement: "With all potential exclusions, OIG considers the relevant information provided by the person as it applies to the relevant factors outlined in our guidance."

The OIG affirmed its commitment to continue investigating and sanctioning executives who commit fraud in addition to those who allow it to happen on their watch.

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