In a warning sign for pharma, ex-J&J execs are convicted in off-label marketing case

Pharma marketers may have felt reprieved after a former Warner Chilcott sales chief was acquitted last month. But now, two former Johnson & Johnson execs have been convicted on off-label marketing charges, raising the specter of more prosecutions in the drug business.

The former CEO and sales VP of Acclarent, which J&J’s devices unit Ethicon bought in 2010, were found guilty of 10 misdemeanor violations of the Food, Drug and Cosmetic Act and now face up to a year in prison for each count. They were acquitted of more serious fraud charges.

The charges are familiar in pharma sales: After a closely watched 6-week trial, the Boston jury decided that William Facteau and Patrick Fabian pushed an Acclarent product for uses the FDA had not approved. The Relieva Stratus Microflow Spacer was green-lighted to keep sinuses open, but Acclarent also promoted it as a steroid delivery device--a use that wasn’t just unapproved, but expressly rejected by the FDA.

The violations began as early as 2006. Facteau and Fabian remained with the company after the Ethicon buyout and then left in 2011.

The convictions come on the heels of a former Warner Chilcott sales chief’s not guilty verdict; W. Carl Reichel was cleared last month of federal conspiracy charges.

Attorneys have seen the Warner Chilcott and Acclarent trials as test cases for the Justice Department’s ambitions. In the so-called “Yates memo” issued last year, Deputy Attorney General Sally Quillian Yates set out her intention to go after individuals for their companies’ misbehavior.  

Reichel was among the very few pharma executives arrested on criminal charges for a company’s alleged marketing violations, and the Justice Department’s failure to secure a conviction illustrated the difficulty of pursuing individuals in such cases. But federal prosecutors said after that verdict that they're not giving up, and the Acclarent decision is likely to give the feds more confidence.

Indeed, the Justice Department didn’t back down on its accusations against Reichel, even after his acquittal. "While we respect the jury’s verdict, we believe that the charge filed against Carl Reichel was supported by the facts and the law,” U.S. Attorney Carmen M. Ortiz, whose office handled Reichel's case, told FiercePharma at the time.

"Cases against high level business executives are difficult to prove and are hard-fought," Ortiz said in an emailed statement. "Nonetheless, they are essential in order to deter corporate executives from engaging in wrongful conduct that improperly attempts to influence doctors."

Reichel’s charges were different--he had been accused of conspiring to pay kickbacks to doctors in return for increased prescriptions for Warner Chilcott drugs, including the bone drug Actonel. But off-label marketing allegations--such as those in the Acclarent case--are common enough in pharma, too.

With recent free speech decisions apparenty watering down the FDA's power to pursue off-label enforcement, however, prosecutions have lately focused on kickbacks. The FDA is set to unveil new guidance for off-label marketing that will take free speech concerns into account.

Meanwhile, another kickbacks case is in the offing, centered on two former sales reps at the pain drug company Insys.

The two men are accused of paying $259,000 in kickbacks--including pricey dinners and visits to strip clubs--to two doctors who wrote prescriptions for Insys’ powerful, fast-acting opioid drug Subsys. Those scripts were worth $6 million in Subsys sales, the Justice Department says. Earlier this year, a former Insys sales rep pleaded guilty to conspiracy fraud charges, including participation in kickback schemes, and last year, a nurse practitioner also pleaded guilty to prescribing Subsys in exchange for $83,000 in kickbacks.

- see the Justice Department announcement

Related Articles:
Ex-Warner exec found not guilty in kickbacks trial, but the 'Yates memo' lives on
In guilty plea, ex-Insys sales rep acknowledges she was the inducement in a kickback scheme​
Ex-Warner Chilcott sales exec goes to court today on kickbacks charges
Former Warner Chilcott exec's kickbacks trial on tap for May
Nurse pleads guilty to taking Insys kickbacks as Subsys marketing probe continues​
Allergan pays $125M to rid itself of marketing charges tied to Warner Chilcott

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