Forest Laboratories Chairman and CEO to Challenge "Unwarranted and Unprecedented" Potential Action to Exclude Him from Federal Healthcare Programs
Potential HHS-OIG Action Does Not Allege Any Wrongdoing
By Howard Solomon, Company's Chairman, CEO & President
If Necessary, Solomon Will Defend Position In Court Vigorously
Solomon to Continue in Chairman, President and CEO Role;
Previously Announced Leadership Plan in Place
NEW YORK--(BUSINESS WIRE)--Forest Laboratories, Inc. (NYSE: FRX) today announced that Howard Solomon, Chairman, Chief Executive Officer and President, will challenge a potential action by the Office of the Inspector General, Department of Health and Human Services (HHS-OIG), to exclude him from participation in federal healthcare programs. Mr. Solomon was notified yesterday of the potential action in a letter from HHS-OIG.
The potential action emanates from matters that were settled by Forest in 2010 with no finding of knowledge or wrongdoing by Mr. Solomon. The only basis given in the letter notifying Mr. Solomon of the potential action is that he is "associated with" Forest. The letter gives Mr. Solomon 30 days to respond and say why he should not be excluded. Should HHS-OIG determine after that that Mr. Solomon be excluded, unless the effectiveness of such exclusion is enjoined by a court, Mr. Solomon would be required to step down from his present executive positions. Mr. Solomon plans to commence immediate litigation to prevent such exclusion from taking effect if HHS-OIG determines to proceed.
Board member and Chairman of the Audit Committee William J. Candee III, speaking on behalf of Forest's entire Board of Directors stated, "It would be completely unwarranted to exclude a senior executive against whom there has never been any allegation of wrongdoing whatsoever. Mr. Solomon has always set a tone of the highest integrity from the top. At Mr. Solomon's direction, the Company has significantly enhanced its sales force monitoring and compliance procedures. We believe the potential HHS-OIG action may well be beyond its legal authority."
Continued Mr. Candee, "At no time during the government's six year investigation of Forest was Mr. Solomon ever accused of any wrongdoing in connection with the matters settled in 2010. We are hopeful that HHS-OIG will decide that the facts and circumstances as to Mr. Solomon do not warrant an exercise of its exclusion authority."
Herschel S. Weinstein, Vice President and General Counsel stated, "Numerous other major pharmaceutical companies have plead guilty to much more egregious offenses, and none of them has faced the exclusion of a senior executive who has not himself been convicted of a crime or pleaded guilty to a crime. We believe that HHS-OIG is contemplating using a statute that has never before been used under these circumstances and would be exceeding the bounds of its authority."
Mr. Candee concluded, "Forest Laboratories is strong and performing well, with new product launches and a product pipeline that is among the finest in the industry, all developed under Mr. Solomon's leadership.
On November 10, 2010, the Company announced a series of executive management promotions, including Elaine Hochberg, Executive Vice President and Chief Commercial Officer, Frank Perier, Jr., Executive Vice President Finance and Administration and Chief Financial Officer, Dr. Marco Taglietti, Senior Vice President Research and Development and President Forest Research Institute, and David Solomon, Senior Vice President Corporate Development and Strategic Planning, which were implemented to ensure a successful CEO succession planning process at the appropriate time. The Board continues to work on a succession plan consistent with the management reorganization announced last November. The Board is confident that Forest Labs has the right team, structure and plan in place to ensure a seamless transition to the next generation of leadership at the appropriate time and to maintain our momentum, pursue our stated strategies, and continue to deliver value for our shareholders should Mr. Solomon step aside temporarily pending the outcome of litigation."
Additional Background
As previously announced, Forest Pharmaceuticals, Inc., a wholly owned subsidiary of Forest Laboratories, Inc., entered into a global settlement in September 2010, as part of which the company, among other things, pleaded guilty in November 2010 to two strict liability, no-intent misdemeanor violations of the federal Food, Drug and Cosmetic Act, relating to conduct that occurred almost a decade ago involving the distribution and marketing of Levothroid and Celexa. The company agreed to a total payment in excess of $313 million to resolve all criminal and civil claims.
About Forest Laboratories
Forest Laboratories' (NYSE: FRX) longstanding global partnerships and track record developing and marketing pharmaceutical products in the United States have yielded its well-established central nervous system and cardiovascular franchises and innovations in anti-infective and respiratory medicine. The Company's pipeline, the most robust in its history, includes product candidates in all stages of development across a wide range of therapeutic areas. The Company is headquartered in New York, NY. To learn more, visit www.FRX.com.
Except for the historical information contained herein, this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, the acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the timely development and launch of new products, and the risk factors listed from time to time in Forest Laboratories' Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and any subsequent SEC filings.
Contacts
Investor:
Forest Laboratories, Inc.
Frank J. Murdolo, 1-212-224-6714
Vice President - Investor Relations
[email protected]
or
Media:
Sard Verbinnen & Co
Hugh Burns/Lesley Bogdanow
1-212-687-8080