WASHINGTON _ Edmon Jennings, vice president of sales andmarketing at Genentech Inc., was indicted by a Minneapolis federalgrand jury on Thursday for alleged participation in an illegal kickbackscheme. The 51-count indictment alleges that Jennings, Caremark Inc.and three of its executives conspired to pay a Minnesota pediatricendocrinologist named David Brown a total of $1.1 million between1986 and 1993 to promote sales of Genentech's synthetic humangrowth hormone, Protropin.The indictment charges that the alleged kickback scheme violatedMedicare/Medicaid anti-remuneration laws and other federal criminalstatutes. (Criminal indictments are only charges and not evidence ofguilt. Defendants are presumed to be innocent unless proven guilty.)Jennings, Caremark and Brown have denied all allegations made by thegrand jury.Caremark, based in Northbrook, Ill., is the sole home health companydistributor of Protropin in the U.S. According to the indictment, Brownwas one of the nation's largest single prescribers of Protropin.Jennings, a corporate officer at Genentech who has worked out of itsSouth San Francisco headquarters for the last eight years, was indictedon three counts: one count of conspiracy and one count each of mailand wire fraud. If convicted, he could face a maximum potentialpenalty of five years in prison and/or a $250,000 fine on each count ofthe indictment.Genentech was not named in the indictment. "Obviously we are veryconcerned about Ed's indictment. He is a highly admired and valuedexecutive who has contributed a great deal to our organization,"Genentech CEO Kirk Raab said in a statement. "We support Ed in hisforthcoming effort to vindicate himself of the charges."Genentech spokeswoman Laura Leber told BioWorld that the companyfirst became aware of the federal investigation in Minnesota last Apriland offered its assistance at that time.Janet Newberg, the assistant U.S. attorney prosecuting the case, toldBioWorld that the investigation of Brown, Caremark and Jennings hadbeen underway in Minnesota for less than a year. She said a number ofdocuments reviewed by the federal grand jury were obtained fromBrown's office last March under a search warrant. The warrant wasexecuted by officials from the FBI and from the Department of Healthand Human Services Inspector General's Office (HHS OIG).According to the 47-page indictment document, Jennings allegedlyauthorized that a total of $478,968.50 in Genentech funds be paid toBrown between 1986 and 1993 in the form of consulting agreements,personnel grants and research grants. Caremark payments to Brownover the same period brought the total to $1.1 million.The indictment alleges that Brown never produced any research papersor results on the effects of Protropin after receiving these payments.Because of this, the indictment charges that the money represented akickback for Brown on his sales of the drug.The indictment alleges that Jennings wrote a letter to Brown dated Feb.5, 1986, in which he agreed to explore Brown's desire to becomeinvolved with Genentech in a "very significant way." This letter wasallegedly followed by a seven-year string of agreements and grantsexecuted between Caremark and Brown and Genentech.On Aug. 11, 1986, Jennings allegedly executed the first of a series ofconsulting agreements and personnel grants with Brown, the last ofwhich was dated Dec. 21, 1993. A total of $224,468.50 was paid toBrown, his nurse and his office staff by Genentech under theseagreements and grants.Next, a grant-in-aid agreement dated Sept. 12, 1986 was executedbetween Caremark and Brown. On July 9, 1987, a Caremark employeeallegedly sent Jennings a memo calculating that Brown would be paid5 percent of revenues received for Protropin shipped on behalf ofBrown's patients. The 5 percent payment was part of the grant-in-aidagreement.On July 9, 1987, Brown allegedly sent a letter to Jennings stating thathe wanted to set $2.3 million for 1987 and $1.35 million for 1986 asthe "bases for our program." Other Caremark memos and notes datedin 1987 and 1988 indicated that Caremark employees were allegedlyapprising Jennings of their grant-in-aid payments to Brown.The indictment alleges that the grant-in-aid agreement betweenCaremark and Brown was terminated in the spring of 1988 afterattorneys grew "uncomfortable" with the arrangement. It was thenallegedly "restructured" into a research grant which involved paymentsto Brown by both Caremark and Genentech.On June 30, 1988, Jennings allegedly authorized the first of 13 creditstotaling $254,500 to be issued by Genentech to reimburse Caremark for50 percent of Brown's research grant expenses. The last credit wasallegedly authorized on Oct. 20, 1993.HHS OIG has been investigating fraud in the home health care businesssince 1991 and Inspector General June Gibbs Brown released astatement in conjunction with Thursday's indictment."The HHS OIG is committed to identifying health care providers whofraudulently abuse our programs and make illegal profit off the painand suffering of our beneficiaries," she said. "The HHS OIG and theDepartment of Justice will assure the American public that wrongdoersare sanctioned to the extent permitted by law."On March 21, 1994, Rep. Ron Wyden (D-Ore.) wrote a letter to FDACommissioner David Kessler asking him to investigate whetherGenentech and Caremark were promoting off-label use of Protropin.Although Protropin is approved only for use by the roughly 7,000children who suffer from growth hormone deficiency, it is now beingprescribed for an estimated 20,000 to 25,000 children.Genentech and Caremark have denied engaging in any off-labelpromotional activity.An FDA spokesman told BioWorld that Kessler's response to Wydenwill be completed "very shortly," possibly within one week. n
-- Lisa Piercey Washington Editor
(c) 1997 American Health Consultants. All rights reserved.