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U.S. Rebuffed in Glaxo Misconduct Case

 

The Wall Street Journal

by Alicia Mundy and Brent Kendall

11 May 11

 

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.....

 

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.....

 

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.....

 

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."....

 

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....

 

"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.....

 

Write to Alicia Mundy at alicia.mundy@wsj.com and Brent Kendall at brent.kendall@dowjones.com

 

http://online.wsj.com/article/SB10001424052748703730804576315101670843340.html

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