Former Drug Company Executive Acquitted in Kickbacks Case

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By Adrianne Appel

June 17 — A federal jury in Boston June 17 acquitted former pharmaceutical company executive W. Carl Reichel of conspiring to pay kickbacks to doctors ( United States v. Reichel, D. Mass., No. 1:15-cr-10324, acquittal 6/17/16 ).

Reichel is a former president of drugmaker Warner Chilcott, now part of Allergan plc, which made headlines last fall when it agreed to plead guilty before a federal judge in U.S. District Court for the District of Massachusetts and to pay $125 million to resolve allegations that it illegally promoted various prescription drugs (210 HCDR 210, 10/30/15). The company was sentenced April 15 (74 HCDR, 4/18/16).

Reichel's acquittal comes as the federal government shows an increased interest in holding individual executives accountable in fraud cases.

Reichel was indicted by a federal grand jury last fall, and charged with conspiracy to violate the anti-kickback law.

At Reichel's indictment, prosecutors argued that the executive had designed the company's sales strategy, which they said included illegally paying doctors to promote Warner Chilcott's prescription drugs.

Insufficient Evidence

Reichel was acquitted after a 15-day trial, on the grounds that there was insufficient evidence that he committed the crime, according to court documents.

“The government did not introduce any evidence of Mr. Reichel agreeing with anyone to break the law,” defense attorneys Joseph Savage and Yvonne Chan of Goodwin Procter LLP, in Boston, said in arguing for acquittal. Instead, prosecutors presented evidence of Reichel speaking to large groups of sales representatives about using medical education credits and speaker programs to sell Warner Chilcott drugs, the attorneys said.

“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 Ortiz told Bloomberg BNA June 17 in an e-mail. “Cases against high level business executives are difficult to prove and are hard-fought. Nonetheless, they are essential in order to deter corporate executives from engaging in wrongful conduct that improperly attempts to influence doctors.”

DOJ's Yates Memo

The pursuit of Reichel was part of a new emphasis by the Department of Justice to prosecute executives for corporate crime, as announced by Deputy Attorney General Sally Yates in a 2015 memo, now referred to as the Yates memo (176 HCDR, 9/11/15).

Neither Chan nor Savage of Goodwin Procter could be reached for comment June 17.

Allergan plc declined to comment, spokesman Mark Marmur told Bloomberg BNA in an e-mail June 17.

To contact the reporter on this story: Adrianne Appel in Boston at aappel@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com