Investigations and multi-million dollar payouts as a result of drugmaker marketing practices have been nothing new in recent years. Throwing an uncommon wrinkle into these marketing practice legal battles, though, InterMune (Nasdaq: ITMN) announced yesterday that one of its former executives, Scott Harkonen, has been indicted on criminal charges based on the drugmaker's pre-2003 promotional practices for its only marketed compound.
In 2006, InterMune paid out nearly $40 million to settle charges over the alleged off-label marketing of its only sales-generating drug, Actimmune. As a result of similar allegations, many other drugmakers, including Eli Lilly (NYSE: LLY) and Cephalon (Nasdaq: CEPH), have had to pay up or are in the process of settling government investigations into their sales practices. Besides Purdue Pharma with its OxyContin pain drug, however, I can't think of any drugmaker whose current or former executives have faced criminal charges for how they've promoted their compounds.
Last year, InterMune's Actimmune had sales of $53 million, 41% lower than in 2006, thanks to a large decrease in sales related to the off-label treatment of idiopathic pulmonary fibrosis (IPF) (unknown scarring of the lungs), which the company made clear it does not promote. InterMune was also working on getting Actimmune approved in this indication, but halted its phase 3 testing early last year after patients treated with Actimmune fared no better than placebo-treated patients.
Because Actimmune has only been FDA-approved to treat an ultra-rare hereditary disease (chronic granulomatous disease) and much of its sales were for off-label IPF usage, it was expected that nearly all Actimmune sales would dry up after the phase 3 trial failure. Surprisingly, that wasn't the case.
If Harkonen, its former CEO, had still been with the company, the newly announced criminal charges would have undoubtedly been disruptive to InterMune. As it stands now, though, the criminal charges filed against Harkonen are just an unfortunate postscript to its saga with Actimmune.
More pharma Foolishness:
- Another one in the pipeline.
- Purdue's mistake.
- More marketing boo-boos.
