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Former Drug Company CEO Convicted on Fraud Charges

September 30, 2009

Harkonen Faces Prison Sentence for Pumping Efficacy of Risky, Useless Drug

W. Scott Harkonen, the former CEO of InterMune, Inc., was convicted in federal court yesterday on wire fraud charges stemming froma 2002 company press release that promoted an Intermune pharmaceutical for treatment of a disease for which it was not approved and never proven safe or effective. The prosecution successfully demnstrated that by touting the drug, which could cost patients $50,000 a year, Harkonen was putting corporate profits and personal gain ahead of patient health and safety.

Intermune’s drug Actimmune was FDA approved for use for extremely rare bone diseases in children. But in 2002, Harkonen wrote and circulated a press release touting the benefits of the drug for treatment of a chronic lung disease in adults, idiopathic pulmonary fibrosis (IPF), stating that a drug trial showed the drug “…may extend the lives of patients suffering from this debilitating disease.”

Sales of Actimmune for its approved uses were estimated to reach a few million dollars annually. But with off-label uses for treating IPF patients, Intermune saw sales jump to over $100 million, making up 94% of the company’s total revenue.

In fact, the day before Intermune released its statement touting Actimmune, the FDA told the company that the trial data did not show safety or efficacy sufficient to grant approval of the drug for IPF. Actimmune never proved effective for treatment of IPF, but the drug was associated with cases of severe respiratory failure in some patients taking the drug. In 2006, the company was forced to pay a $37 million fine for its promotion of Actimmune, and by 2007 Intermune had abandoned IPF studies of the drug.

Pushing drugs for risky, unapproved uses has become commonplace for Big Pharma. Pfizer was recently hit with a $2.3 billion fine, the largest-ever health care fraud penalty, for its marketing of Bextra and other drugs, and also paid Nigerian authorities $75 million in relation to children who suffered injuries and death related to treatment with an unapproved Pfizer antibiotic. Eli Lilly and Merck have also been in the news for promoting off-label uses of their drugs (and Merck for producing a fake “journal” intended to appear as an independent, peer-reviewed source).

In the opening of Harkonen’s trial, Assistant U.S. Attorney Ioana Petrou leading the prosecution stated, “Why did he do all this? He did this to make money for his company, plain and simple.” As founder and CEO of Intermune, Harkonen’s personal wealth was intimately tied to the company’s fortunes. Harkonen (currently CEO of another biotech drug maker, CoMentis) founded InterMune in 1999 and served as CEO until 2003; between 2000 and 2002 alone, Harkonen took home nearly $1.3 million in salary and bonuses, and millions more in stock options.

Conviction for wire fraud carries a maximum $250,000 fine, so the only way the judge can insure that crime doesn’t pay in this case is with a lengthy prison sentence. The maximum is twenty years. Harkonen’s lawyers have vowed to appeal the decision.

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