Circuit Affirms Drug Executive's Fraud Conviction

Scott Graham

2013-03-04 02:55:50 PM

SAN FRANCISCO — The U.S. Court of Appeals for the Ninth Circuit affirmed a pharmaceutical executive's groundbreaking conviction Monday for misstating clinical study results in a company press release.

Turning back W. Scott Harkonen's claim that the conviction criminalizes genuine scientific debate, the court upheld his wire fraud conviction for misrepresenting the therapeutic value of Actimmune. "Harkonen's scientific methods were not on trial; the issue was whether he misleadingly presented his analyses in the press release," the Ninth Circuit stated in an unpublished, per curiam opinion.

Plenty of evidence from trial showed the press release was meant to mislead, even if it was not literally false, the court ruled. "Testimony indicated that even Harkonen himself was 'very apologetic' about the press release's misleading nature," the court stated in U.S v. Harkonen.

Judges Dorothy Nelson, A. Wallace Tashima and Mary Murguia, who heard argument in the case in December, signed the opinion.

The ruling was a loss for Sidley Austin's Mark Haddad, who had argued that study methodologies and statistical probabilities are matters of scientific debate that the government must not be allowed to silence through criminal prosecution.

Harkonen was CEO of Brisbane-based InterMune Inc. The FDA had approved its Actimmune drug to treat two rare pediatric diseases, but Harkonen believed it might also help treat idiopathic pulmonary fibrosis, a potentially larger market. When data from a 2002 clinical trial proved disappointing, Harkonen directed that the 330 test subjects be divided into subgroups, then touted data from the most favorable subgroups in the press release. His goal was getting doctors to prescribe the drug and patients to request it, prosecutors alleged.

He was convicted of wire fraud but acquitted of misbranding. The government asked for a 10-year prison sentence and a $1 million fine, but U.S. District Judge Marilyn Hall Patel, now retired, gave him three years' probation, six months' home detention, community service and a $20,000 fine.

With support from the pharmaceutical industry, Harkonen argued on appeal that scientists can genuinely debate how to present statistical probabilities of medical outcomes. The Ninth Circuit disagreed.

"Harkonen's request that we reverse his conviction because he was engaging in a genuine scientific debate is hardly different than arguing that he is innocent; genuine debates of any sort are, by definition, not fraudulent," the opinion stated. "Here, a jury found, beyond a reasonable doubt, that Harkonen issued the press release with the specific intent to defraud, and that finding is supported by the evidence presented at trial."

Monday's decision will jeopardize Harkonen's career in pharmaceuticals. According to briefing in the appeal, federal regulators are seeking to ban Harkonen from involvement in any federal health care programs for five years based on the conviction, plus a lifetime ban from "providing services in any capacity to a person that has an approved or pending drug product application."

Assistant U.S. Attorney Anne Voigts argued the case for the government.

Haddad issued a statement Tuesday saying he was disappointed with the ruling and planned to seek en banc review. "The implications of the decision, if allowed to stand, are profound," he said in the statement. "The decision calls into question the lawfulness of many opinions routinely offered in the publications of scientists throughout the country, as well as the methodology underpinning future government decisions regarding the allocation of health care treatments and procedures."

Editor's Note: This article has been updated to include a statement from Mark Haddad.