Few federal lawsuits over the past 2 decades have been brought against executives of pharmaceutical and medical device companies via the little-known To park doctrine, a powerful legal tool available to the Department of Justice (DOJ) that does not require proof of intent for liability, a systematic review of the literature found.
Since 2000, only 13 lawsuits (11 guilty pleas, two jury trials) from six pharmaceutical or medical device companies have indicted individual executives for violating the Food, Drug, and Cosmetic Act (FDCA) using this the so-called corporate officer doctrine, according to Aaron S. Kesselheim, MD, JD, MPH, of Brigham and Women’s Hospital in Boston, and colleagues.
Of the six companies, three were opioid makers – Purdue Pharma notably – while two were medical device makers and one was a compounding pharmacy, they detailed in JAMA internal medicine.
By comparison, from 1991 to 2015, more than 100 FDCA fraud settlements took place between the government and drug companies for illegal promotion, racking up $11 billion in fines from the companies, according to a Public Citizen report cited by the group. Kesselheim, most performing since 2000. .
“Some of the biggest misconduct settlements in the drug and medical device industries have resulted from illegal off-label promotion by pharmaceutical companies,” the group wrote. However, “the DOJ almost always targeted companies, rather than the individuals who ran them,” resulting in corporate integrity settlements and agreements, with no executives held accountable. “To park charges could have been brought by prosecutors in these cases, but they rarely chose to do so.”
Of the 16 largest settlements with pharmaceutical companies from 2000 to 2015, only one (Purdue Pharma) successfully used To park to hold individual leaders accountable. In this case, Howard Udell, Paul Goldenheim and Michael Friedman, the company’s top lawyer, medical director and president, each agreed to 3 years probation, 400 hours of community service and paid various individual fines of a million dollars on the “unlawful promotion” of extended-release oxycodone (OxyContin).
“What we’ve seen for decades is a lot of enforcement actions against companies and resolutions with companies, but relatively few involving executives of those companies,” said Jacob Elberg, JD, of Seton Hall Law. School in Newark, New Jersey. MedPage today. Elberg is the author of an editorial accompanying the study.
The To park doctrine was established after a 1975 case — United States vs. Park – upheld the conviction of a CEO of a national food chain who had a rodent infestation. It’s a legal tool that allows the federal government to prosecute corporate executives based on their position of authority in a company that breaks the law – even if the executives personally didn’t break the law – simply because they could have prevented the wrongdoing.
“The government doesn’t have to prove things that they normally have to prove that are really difficult, including knowledge and intent,” said Elberg, who is also a former health care fraud prosecutor. DOJ health. “That’s why it’s both powerful and why it’s controversial.”
If the DOJ used this doctrine more, the study authors say, they could hold corporate executives personally liable more often. But, they suggest, prosecutors have been reluctant to use To park “to sanction problematic corporate behavior that threatens patients and public health.”
Where the government has used the tool, Kesselheim and his co-authors noted, they have used it in the context of cases where it has been individual criminal liability of directors.
“That can be problematic because not-To park charges may not adequately address the type of negligent supervision To park the doctrine was designed to prevent,” they argued. “Because they all require proof of intent, these other charges raise the bar for a conviction.
To identify To park lawsuits, the researchers searched Westlaw, Google Scholar, DOJ press releases, industry newsletters, and other legal documents. They then compared their findings with a 2016 Public Citizen report listing deals between the government and drug companies that included 105 charges of “unlawful promotion,” a violation that can be used to bring To park doctrinal case.
Of the 13 lawsuits filed under the To park doctrine, three opioid manufacturers involved (Purdue Pharma, KV Pharmaceutical Company and Indivior) charged with unlawful promotion in two cases and manufacturing errors in the other; two were medical device manufacturers (Synthes and Acclarent) accused of illegal promotion; and the other was a compounding pharmacy (Brown’s Compounding Center) responsible for selling an unapproved drug.
The defendant executives of all six companies, except one, pleaded guilty to misdemeanor misdemeanor charges. Acclarent’s CEO and VP of Sales went to trial by jury and were found guilty of 10 counts of misdemeanor misdemeanor. The longest sentence for any of the 13 executives was 9 months (two of the Synthes executives).
This study was funded by grants from Arnold Ventures, a philanthropic organization.
Daval has not reported any conflicts of interest. The co-author reported personal fees from the state of West Virginia for serving as an expert witness in a case against various opioid manufacturers.
Elberg has reported no conflicts of interest.