Home San Francisco Press Releases 2009 W. Scott Harkonen, Former Biotech CEO, Convicted of Wire Fraud
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W. Scott Harkonen, Former Biotech CEO, Convicted of Wire Fraud

U.S. Attorney’s Office September 29, 2009
  • Northern District of California (415) 436-7200

SAN FRANCISCO—W. Scott Harkonen, M.D., the former CEO of InterMune, Inc., was convicted of wire fraud for the creation and dissemination of false and misleading information about the efficacy of InterMune’s drug Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis ("IPF"), the United States Attorney's Office for the Northern District of California and the Civil Division of the United States Department of Justice announced.

The jury, in its third day of deliberations, found the defendant guilty of wire fraud related to a press release issued on Aug. 28, 2002. The defendant was acquitted of a misbranding charge brought under the Federal Food, Drug, and Cosmetic Act. The guilty verdict followed a seven-week jury trial before U.S. District Court Judge Marilyn Hall Patel.

Evidence at trial showed that Harkonen, a medical doctor, was the Chief Executive Officer of InterMune from February 1998 through June 30, 2003, and a member of InterMune’s Board of Directors. Under defendant Harkonen's direction, InterMune marketed and sold Actimmune to treat the fatal disease IPF despite the fact that Actimmune was not approved by the Food and Drug Administration ("FDA") as a safe and effective treatment. The cost of Actimmune for one IPF patient for one year was approximately $50,000 and the vast majority of InterMune’s sales of Actimmune were for the unapproved, off-label use of treating IPF.

Evidence at trial further showed that the defendant caused InterMune to issue a press release publicly announcing the results of a clinical trial of Actimmune for the treatment of IPF on Aug. 28, 2002. Although the clinical trial in fact failed, Harkonen caused the issuance and distribution of a false and misleading press release to portray that the results of the trial established that Actimmune helped IPF patients live longer. Specifically, the press release's headline falsely stated that, “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF,” with the subheading “Reduces Mortality by 70% in Patients With Mild to Moderate Disease.”

In October 2006, InterMune agreed to enter into a deferred prosecution agreement and to pay nearly $37 million to resolve criminal charges and civil liability in connection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

“This conviction of W. Scott Harkonen demonstrates the Department of Justice’s commitment to hold accountable those corporate executives who provide false or fraudulent information about pharmaceutical trials,” said Ann Ravel, Deputy Assistant Attorney General for the Civil Division. “When corporate executives provide false or fraudulent information about pharmaceutical trials, they jeopardize the public health and welfare. The Department of Justice is committed to ensuring that doctors and patients receive truthful information about medical products."

“Today’s verdict demonstrates that pharmaceutical executives will not be able to hide behind a corporate shield when they promote drugs using false or fraudulent information,” said Thomas P. Doyle, Special Agent in Charge of FDA’s Office of Criminal Investigations, Metro Washington Field Office. "Pharmaceutical companies do not run themselves, and those who engage in criminal conduct will be held personally accountable."

"Mr. Harkonen lied to the public about the results of a clinical trial and offered false hope to people stricken with a deadly disease. Manipulating scientific research and falsifying test results damages the foundation of the clinical trial process and undermines public trust in our system for drug approval," said FBI Special Agent in Charge Stephanie Douglas.

Douglas J. Carver, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Western Field Office, stated “today’s verdict, which resulted from a complex and labor-intensive investigation and trial, demonstrates our commitment to work with our law enforcement partners to aggressively pursue all individuals that would jeopardize the integrity and safety of the VA’s health care system. The actions of this defendant served to divert precious financial resources from the VA’s critical mission of providing healthcare to this nation’s military veterans. The VA OIG will continue to aggressively pursue investigations of this type and hold those responsible accountable for their actions.”

The maximum statutory penalty for 18 U.S.C. § 1343 (wire fraud) is 20 years in prison, $250,000 fine, three years supervised release, and $100 mandatory special assessment. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

This case is being prosecuted by Assistant U.S. Attorney Ioana Petrou of the Northern District of California and Trial Attorney Allan Gordus of the Office of Consumer Litigation in the Civil Division in Washington, D.C., with the assistance of Associate Chief Counsel Anne Walsh of the FDA Office of Chief Counsel, Paralegal Specialists Matthew McCrobie and Matthew Robinson, and Legal Technician Jennifer Hiwa. The prosecution is the result of a multi-year investigation by the Federal Bureau of Investigation; the Food and Drug Administration's Office of Criminal Investigations; the U.S. Department of Veterans Affairs, Office of Inspector General; and the Office of Personnel Management, Office of the Inspector General.

Further Information:

Case #: 08-164 MHP

A copy of this press release may be found on the U.S. Attorney’s Office’s Web site at www.usdoj.gov/usao/can.

Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s Web site at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Jack Gillund at (415) 436-6599 or by e-mail at Jack.Gillund@usdoj.gov.

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