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By Eric Topor
Aegerion Pharmaceuticals faces the prospect of a criminal trial for alleged misbranding of its cholesterol drug Juxtapid after a federal court Nov. 20 rejected a $6.2 million plea agreement.
The U.S. District Court for the District of Massachusetts issued a scathing order rejecting the “C” plea, which prevents a court from deviating from the agreed punishment terms, as being too lenient without adequate explanation. Judge William G. Young criticized the fine as falling far short of the sentencing guidelines of between $18.5 million and $30.9 million. The judge also faulted the agreement for failing to require restitution for actual victims of the misbranding scheme, and for limits it placed on further corporate cooperation, criminal prosecution, and independent compliance review ( United States v. Aegerion Pharm., Inc. , 2017 BL 416177, D. Mass., No. 17-cr-10288, 11/20/17 ).
Aegerion, now a subsidiary of Vancouver-based Novelion Therapeutics, reached a $40.1 million civil False Claims Act settlement with the Department of Justice and the Securities and Exchange Commission in September that allowed the company or the government to rescind the agreement if the court rejected the criminal plea deal.
The possible implosion of the settlement could make other corporations facing FCA investigations more reluctant to settle civil claims without a greater assurance of a resolution for both civil and criminal liability. A potential guilty verdict in a criminal trial heightens the potential civil liability Aegerion could face in renewed FCA litigation if the settlement is rescinded by either party.
The government alleged that Aegerion misled physicians into prescribing Juxtapid (lomitapide) for pediatric and elderly patients for whom the drug was not approved by the Food and Drug Administration. Young rejected the argument that the settlement was sufficient justification for accepting the plea.
Novelion said in a statement released Nov. 21 that it was “evaluating its options and next steps” with legal counsel in light of the court’s rejection of the plea deal. The U.S. Attorney’s Office for the District of Massachusetts and counsel for the whistleblowers who brought the civil FCA case didn’t respond to Bloomberg Law’s requests for comment.
Trial in the case is scheduled to begin April 30, 2018.
The court was unsparing in its criticism of the Department of Justice for what Young saw as favorable terms for Aegerion in the plea deal, and a perceived leniency afforded to many corporate defendants facing criminal charges. Young didn’t see why the DOJ “does not simply let Aegerion collapse in disgrace,” despite its cooperation with the government during the investigation, or force Novelion to assume the full costs of Aegerion’s criminal behavior.
Young wondered why Aegerion was offered a C plea, and said these pleas undermine public faith in the criminal justice system. Young said these “cozy” C pleas allow corporate defendants to escape the threat of a public airing of criminal acts during trial, and allow corporations the advantage of “effective damage control.”
The court expressed disdain that corporations are offered C pleas while individual defendants rarely are afforded that advantage. Young pointed to Aegerion’s own list of pharmaceutical companies that accepted C pleas in the U.S. District Court for the District of Massachusetts as evidence of why the practice should be stopped, turning Aegerion’s argument for accepting its own plea as a matter of consistency on its head.
The U.S. Attorney’s Office for the District of Massachusetts represented the government. Ropes & Gray LLP represented Aegerion.
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