By now you are probably familiar with the story of Lauren Stevens, a former vice president and associate general counsel of pharmaceutical company GlaxoSmithKline, who was prosecuted by the U.S. Department of Justice for allegedly misleading the Food and Drug Administration (FDA) about her company’s promotion of the anti-depression drug Wellbutrin.
It’s not often that we in-house lawyers get a scare like United States v. Lauren Stevens. Since the trial ended on May 10 when the judge granted a motion for acquittal, and the jury reportedly stood up and applauded, law firm advisories, blogs and seminars on how in-house lawyers can avoid going to jail for making statements to the government have been pouring forth.
I don’t want to rehash what has already been said about the Stevens case. I do think the following: The attempt by the Department of Justice to prosecute a company lawyer for not voluntarily turning herself into a pseudo-government investigator, initiating a companywide search for internal documents and then handing over anything that turned up regardless of the consequences—all in response to a mere inquiry letter—will damage cooperation between in-house lawyers and regulators for years to come. I also think the matter could have been handled differently by in-house counsel.
While Lauren Stevens was ultimately vindicated as much as any criminal defendant can be, I’m sure Stevens rues the day the FDA inquiry letter came across her desk. What could she have done differently (not including the whistleblower paralegal, which was out of her control)?
I don’t think that the unfortunate chain of events that lead to Stevens’ indictment was simply a matter of the language used in Stevens’ correspondence with the FDA or failing to produce a handful of documents. There are lessons that can be learned by looking at whether Stevens set objectives for responding to the government, what those objectives were and how Stevens saw her role in the matter vis-à-vis Glaxo, her employer and the outside law firm advising her.
In acquitting Stevens, the judge cited the broadness of the FDA’s request as mitigating against a finding that Stevens intended to deceive. I think Stevens initial response put Stevens on a path that ended with her indictment. Stevens agreed to the FDA’s request wholesale; her only caveat was that some of the promotional materials might not belong to Glaxo. Did Stevens have any idea of what she was going to find in her search?
Of the 2,700 individuals promoting Wellbutrin under contract with Glaxo, Stevens actually reached out to only 550 and of those, only 40 responded. Out of the 40, it turned out that 28 had been promoting the drug for unapproved or off-label uses. Clearly there was a problem at Glaxo with illegal promotion, or at least with Glaxo’s contractors. As a vice president in the legal department and someone with many years at the company, Stevens should have known of the potential for incrimination. Too often, in-house lawyers insulate themselves from their companies’ daily business operations. It is our job to know what goes on, both the good and the bad.
Stevens’ repeatedly stated in her letters to the FDA that Glaxo had not established a program to promote Wellbutrin for weight loss, for which the drug was not approved. The statements were apparently based on a distinction between off-label promotion and Glaxo pursuing a “corporate strategy” of off-label promotion. Was it Stevens’ objective to respond to the FDA by providing promotional materials? Or did Stevens attempt to use the opportunity to discourage the FDA from further investigation?
It’s not clear what Stevens’ objectives were. The hard truth is that Stevens followed her agreement to produce anything and everything with a scaled-down effort to produce documents, followed by her discovery that, indeed, Glaxo-hired doctors were illegally promoting Wellbutrin. Faced with a dilemma of her own making, Stevens and the outside law firm engaged in a “black eye/feather in your cap”-type analysis of whether or not to follow through on Stevens’ initial commitment, which did nothing to help the situation.
If Stevens was convinced that Glaxo needed to produce something in response to the FDA inquiry, her first step should have been to set achievable business and legal objectives, then communicate those objectives to the FDA, along with the rationale. If Stevens’ thinking was that only off-label promotion directed by corporate management was a proper subject of inquiry, the objective would have become one of explicitly setting corresponding limits on the scope of the document search from the outset. Without objectives, it is impossible to set expectations in others or to make the right decisions in a business setting. Certainly the FDA lawyers felt double crossed when they received a final letter from Stevens without ever having received even one page of the promotional materials she had promised.
Stevens was indicted twice. The first indictment was thrown out because the Department of Justice had not advised grand jurors to consider a possible “advice of counsel” defense—here, Stevens acting on the advice of Glaxo’s outside law firm, King & Spalding. That Stevens discussed the matter at length with the firm was a significant factor in the acquittal. Several commentators have suggested that Stevens should have let the law firm respond for her.
I think Lauren Stevens was right to have answered on behalf of Glaxo. It was within her job description to do so. And in matters where how a company does business are at issue, in-house counsel is always best positioned to lead. If the case had continued, however, Stevens would have argued that King & Spalding had prepared all of the written responses and made the decisions on how to respond to the FDA. If that’s true, if Stevens relinquished the decision making to the law firm, she did both Glaxo and herself a disservice. If Glaxo management was pressuring Stevens to get the FDA off their backs, it was up to Stevens to explain that their approach was infeasible and could backfire.
In tough situations like the one Lauren Stevens found herself in, in-house lawyers need to be several things. They need to be clear-thinking. They need to be in control. And they need to want to personally meet the challenge and be judged by the results. Doing so will go much further in keeping in-house lawyers out of jail than pleading an advice-of-counsel defense.