Friday, October 2, 2009

Former Biotech CEO Convicted Of Wire Fraud Related To Press Release About Drug Actimmune But Acquitted Of Misbranding The Drug

A rare pharmaceutical fraud case, U.S. v. W. Scott Harkonen, M.D. (the former CEO of InterMune, Inc.), Case No. 08-164 MHP, that went to a jury trial for seven weeks in the Northern District of California before U.S. District Court Judge Marilyn Hall Patel, concluded on June 29, 2009.

The jury, in its third day of deliberations, found Dr. Harkonen guilty of wire fraud related to a press release issued on Aug. 28, 2002 about the efficacy of InterMune’s drug Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis ("IPF"). Dr. Harkonen was acquitted of a misbranding charge brought under the Federal Food, Drug, and Cosmetic Act.

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 regarding a clinical study that supposedly showed benefits for some IPF patients. Specifically, the press release's headline stated that, “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF,” with the subheading “Reduces Mortality by 70% in Patients With Mild to Moderate Disease.” One of the issues at trial is whether the press release was true or not.

This prosecution is unusual in that the criminal prosecution of the former CEO came years after he left the company and after the company entered into a deferred prosecution agreement with the Justice Department. Dr. Harkonen left InterMune in 2003. In October 2006, InterMune agreed to enter into a deferred prosecution agreement and to pay nearly $37 million to resolve criminal charges and civil liability in connection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

Because the government rarely prosecutes individual health care executives for fraud, attorneys involved in the case probably believed the company's deal would effectively end the criminal investigation. The government continued the investigation and indicted Dr. Harkonen on two counts: wire fraud and felony misbranding of a drug. A copy of the Indictment can be found at:;selector-perfector

The maximum statutory penalty for 18 U.S.C. § 1343 (wire fraud) is 20 years in prison, $250,000 fine, three years supervised release, and $100 mandatory special assessment. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Judge Patel set a December 18, 2009 hearing for post-trial motions.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is:


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