Sunday, May 15, 2011

WSJ 5/11/11 -U.S. Rebuffed in Glaxo Misconduct Case

  • The Wall Street Journal

U.S. Rebuffed in Glaxo Misconduct Case

A federal trial judge on Tuesday acquitted a former GlaxoSmithKline PLC lawyer in a high-profile corporate misconduct case, dealing a blow to the government's effort to target individuals in probes of the pharmaceutical industry.
U.S. District Court Judge Roger Titus in Maryland took the rare move of acquitting former Glaxo lawyer Lauren Stevens without sending the case to the jury.
Judge Titus called his summary move to acquit Ms. Stevens a first in his seven-and-a-half years on the federal bench. "The defendant in this case should never have been prosecuted and she should be permitted to resume her career," he said.
Prosecutors had alleged Ms. Stevens obstructed a Food and Drug Administration investigation into whether Glaxo had improperly promoted the antidepressant Wellbutrin for weight loss, a use not approved by the FDA.
The government's defeat points to the difficulty of prosecuting individuals over alleged wrongdoing at large corporations, where teams of people may be involved in a matter and it is hard to show that executives intended to break the law.
Despite calls for prosecution of top Wall Street figures in the wake of the 2008 financial crisis, the Justice Department has brought only a handful of cases against individuals, and lost some prominent cases.
Ms. Stevens's sudden acquittal could hurt other government efforts, including the long-running investigation of Glaxo for marketing issues related to several drugs, said defense attorneys. They said the Justice Department and the Department of Health and Human Services may have to review their larger strategy of targeting executives and lawyers at pharmaceutical companies.
The Justice Department cannot appeal Tuesday's acquittal. "We believe these charges were well-founded and that the jury should have been allowed to deliberate and decide this case," a department spokesman said.
Pharmaceutical companies have paid billions of dollars to settle various marketing-related charges with the government, but only a few executives have pleaded guilty to any crimes.Government officials have said they decided to go after more individuals to create a stronger deterrent and prevent companies from viewing fines as merely "a cost of doing business."
Prosecutors alleged Ms. Stevens falsely denied that the company had promoted Wellbutrin for unapproved or "off-label" uses, despite knowing that the company had sponsored programs with doctors' groups involving Wellbutrin. Companies are barred from off-label marketing but doctors can generally prescribe an FDA-approved drug for any condition.
Defense lawyers for Ms. Stevens said she provided legitimate and zealous representation of Glaxo and relied in good faith on the advice she received from an outside law firm.
The judge agreed, saying it would be a "miscarriage of justice" to let the case get to the jury.
"We did not have a bad five minutes in that courtroom; if it had been a prize fight, they would have stopped it," said Ms. Stevens's lawyer, Reid Weingarten, who has represented Cabinet secretaries and corporate chiefs.
It is rare for the government to charge a lawyer over advice given to a client, because such conversations are generally protected unless the lawyer is helping the client commit a crime.
Judge Titus's ruling is likely to make such prosecutions rarer still. "There is an enormous potential for abuse in allowing prosecution of an attorney for the giving of legal advice," the judge said.
The government has long been investigating Glaxo over various allegations related to sales of antidepressants Paxil and Wellbutrin, as well as its former popular diabetes drug Avandia. Glaxo hasn't been charged with wrongdoing in these cases, but the investigation is continuing, according to people familiar with the matter.
Its outside counsel, King & Spalding LLP, didn't return calls requesting comment.
The government hasn't said whether the prosecution of Ms. Stevens was part of an effort to push Glaxo into a plea deal. It said in court documents in December that the Stevens case was part of an "ongoing underlying health-care fraud investigation" looking at her and "potential criminal activity by others."
The company has declined to comment on the cases, and it hasn't said under what terms Ms. Stevens left the company last year.
It said Tuesday that it was "pleased" with her vindication.
"The acquittal certainly strengthens Glaxo's hand in negotiations with the government about a corporate resolution of their case," said John Fleder, a defense attorney with Hyman, Phelps & McNamara PC who wasn't involved in the case.
FDA officials and the inspector general of the Department of Health and Human Services have said that the government wants to make more use of an administrative option to punish executives by excluding pharmaceutical company leaders from the industry. That option may look more attractive after the failure of the criminal case against Ms. Stevens.
Companies that employ an "excluded" executive can be prevented from selling products to the U.S. government—which almost all pharmaceutical firms do. In essence, the step can force a company to dump its chief in order to do business with Medicare or the Veterans Administration.
In April, the HHS inspector general created a firestorm in the drug industry when the agency said it intends to exclude the longtime chief executive of Forest Laboratories Inc, Howard Solomon. The company has protested the move and said Mr. Solomon had nothing to do with marketing violations for which the company agreed to pay more than $300 million in civil and criminal fines.
Write to Alicia Mundy at and Brent Kendall at

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