An up-and-coming federal prosecutor squared off Tuesday against a hardened defense veteran in one of the rare pharmaceutical fraud cases to hit a jury.
W. Scott Harkonen, former CEO of Brisbane-based biotech InterMune, concocted a press release that made false statements about the efficacy of his company's star drug, Assistant U.S. Attorney Ioana Petrou said in her opening statement. And while Harkonen had ample opportunity to correct his behavior, instead he concealed it, she said.
"Why did he do all this? He did this to make money for his company, plain and simple," said Petrou, who added that billions of dollars in revenue were at stake.
Yet Harkonen's attorney, Marcus Topel of Kasowitz Benson Torres & Friedman, maintained that everything his client asserted in the press release was true. And Harkonen would never have embarked on the clinical trial discussed in the press release, Topel said, if all he cared about were profits.
"Dr. Harkonen is a man concerned about the correctness of research," he said.
Both sides delivered their presentations smoothly, with neither drawing an objection. Petrou spoke just over a half-hour and Topel went twice as long.
The Food and Drug Administration approved InterMune's drug Actimmune to treat two rare childhood diseases. But InterMune also sought to market it to patients suffering from idiopathic pulmonary fibrosis, a lung disease that occurs far more frequently.
In 2002, InterMune issued a press release trumpeting a clinical study that supposedly showed benefits for some IPF patients. However, the government contends the company grossly misstated the data and directly contradicted guidance Harkonen had just received from the FDA.
Harkonen left InterMune in 2003 and by 2006 the company entered into a deferred prosecution agreement with the Justice Department. Because the government rarely prosecuted individual health care executives for fraud, attorneys involved in the case believed the company's deal would effectively end the criminal probe.
But Petrou continued the investigation and indicted Harkonen last year on two counts: wire fraud and felony misbranding of a drug. Petrou leads the U.S. attorney's office's health care fraud efforts, and some defense lawyers are viewing the Harkonen case as a measure of her trial guile.
Harkonen, a middle-aged man with wavy hair and dark frame glasses, originally retained Wilmer Cutler Pickering Hale and Dorr but then hired Morrison & Foerster's James Brosnahan. After indictment he settled on Topel, a fixture of the federal defense bar in the Bay Area. The case is before U.S. District Judge Marilyn Hall Patel in San Francisco.
Petrou and Topel each appeared to draw on negative health care industry memes to advance their views of the case. The prosecutor promised that the jury would see an internal video in which Harkonen describes his biotech company as "a sales and marketing organization." Topel lambasted the government's first witness, an FDA medical doctor, as a "career regulator bureaucrat" who held a grudge against Harkonen because of disagreements over the structure of a clinical trial.
Likewise, one of the independent doctors overseeing the clinical trial -- who wrote a scathing letter to Harkonen over InterMune's press release -- is "very, very arrogant," Topel said, with "a tendency to take over conversations he's involved with." According to Topel, this doctor's true motive for attacking Harkonen stemmed from a decision by InterMune to not invite him to a scientific meeting about the drug.
And far from being a greedy CEO who the government says was fired, Harkonen actually left InterMune because the company wouldn't sink more revenue into research and development. "He said, 'I'm taking a hike,' and he did," Topel said.
While Petrou characterized the clinical trial as a "failure," Topel said Harkonen relied on doctors within InterMune who thought it showed benefits.
The company discontinued a subsequent clinical trial in 2007 because it was not showing that Actimmune effectively treated IPF. InterMune then announced it would lay off half of its workforce. This, however, was not mentioned in court Tuesday; before trial Patel turned back government attempts to introduce those events.
The trial is expected to last at least four weeks.