Former Intermune CEO W. Scott Harkonen Indicted for Wire Fraud and FDA Violations

SAN FRANCISCO, March 18, 2008 – W. Scott Harkonen, M.D., the former CEO of InterMune Inc., was indicted on wire fraud and felony Food, Drug and Cosmetic Act charges for his role in the creation and dissemination of false and misleading information about the efficacy of InterMune’s drug Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis (IPF), the Justice Department announced today.

The indictment alleges that Harkonen, a medical doctor, was the chief executive officer of InterMune from February 1998 through June 30, 2003, and a member of InterMune’s board of directors from February 1998 through September 2003. Under Harkonen's direction, InterMune marketed and sold Actimmune to treat IPF, a fatal disease, despite the fact that the drug was not approved by the Food and Drug Administration (FDA) as a safe and effective treatment.

According to the indictment, Harkonen promoted and caused the promotion by InterMune of Actimmune as a safe and effective treatment for IPF, despite the lack of FDA approval, in order to sell more Actimmune and to generate revenues and profits from sales of the pharmaceutical for InterMune. The cost of Actimmune for one IPF patient for one year was approximately $50,000 and the vast majority of the company’s sales of Actimmune were for the unapproved, off-label use of treating IPF.

The indictment further states that Harkonen devised a scheme to induce doctors to prescribe, and patients to take, Actimmune to treat IPF. As part of that scheme to defraud, on Aug. 28, 2002, InterMune issued a press release publicly announcing the results of a clinical trial of Actimmune for the treatment of IPF. Although the clinical trial in fact failed, Harkonen caused the issuance and distribution of a false and misleading press release to portray that the results of the trial established that Actimmune helped IPF patients live longer. Specifically, the press release's headline falsely 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.”

According to the indictment, it was part of the scheme to defraud that the information in the press release be conveyed to pharmacies that sold Actimmune and to patients and doctors. In furtherance of this scheme, defendant Harkonen caused a specialty pharmacy to distribute the misleading information in the press release to more than 2,000 pulmonologists and to patients taking Actimmune.

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 connnection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a 5-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

“When corporate executives provide false and misleading information about pharmaceuticals, they jeopardize the public health and welfare,” said Jeffrey S. Bucholtz, acting Assistant Attorney General for the Civil Division. “The Department of Justice is committed to ensuring that patients and their doctors receive truthful information about medical products and will hold accountable those individuals who are responsible for sending the public deceptive information.”

“The U.S. Attorney's Office for the Northern District of California is committed to protecting the public against health care fraud,” said Brian J. Stretch, acting U.S. Attorney. “Those who unlawfully violate the trust that exists among the biotechnology industry, the FDA, doctors and patients will be prosecuted.”

The maximum statutory penalty for wire fraud is 20 years in prison, a $250,000 fine, three years supervised release and, $100 mandatory special assessment. The maximum statutory penalty for acting with intent to defraud and mislead, resulting in drugs being misbranded while held for sale after shipment in interstate commerce, is three years in prison, a $250,000 fine, one year 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. Harkonen is scheduled to be arraigned on Friday, March 28, 2008, at 9:30 a.m. before the Hon. Magistrate Judge Joseph C. Spero.

“Pharmaceutical executives who promote drugs using false and misleading information should not be allowed to hide behind a corporate shield,” said Kim Rice, Special Agent in Charge of FDA's Office of Criminal Investigations, Washington Field Office. “Pharmaceutical companies do not run themselves, and those who engage in criminal conduct will be held personally accountable.”

“We have an obligation to pursue and bring to justice those who prey on the vulnerable and place profits before public health,” said FBI Special Agent in Charge Charlene B. Thornton. “This four-year investigation reflects the seriousness with which the FBI takes violations of the law by those entrusted to safeguard the health of the public.”

“The results of this criminal investigation show our commitment to protect the Veteran Administration’s healthcare system from deceptive and fraudulent practices by pharmaceutical companies,” said Special Agent in Charge Douglas J. Carver of the U.S. Department of Veterans Affairs, Office of Inspector General. These charges are the result of a multi-year investigation by the Federal Bureau of Investigation; the Food and Drug Administration's Office of Criminal Investigations; the Department of Veterans’ Affairs' Office of Investigations; and the Office of Personnel Management's Office of Investigations.

This case is being prosecuted by Assistant U.S. Attorney Ioana Petrou of the Northern District of California and trial Attorneys Sondra Mills and Allan Gordus of the Office of Consumer Litigation in the Civil Division in Washington with the assistance of Associate Chief Counsel Anne Walsh of the FDA Office of General Counsel, Paralegal Specialists Maryam Beros and Matthew McCrobie, and Legal Technician Ana Guerra.

An indictment contains only allegations against an individual and, as with all defendants, the defendant in this case must be presumed innocent unless and until proven guilty.

Contact:
202) 514-2007
TDD (202) 514-1888

Posted: March 2008


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