Court Upholds HHS Ban Of Three Pharmaceutical Executives

The District of Columbia Court of Appeals upheld a ban by the U.S. Department of Health & Human Services prohibiting three former executives from serving in the healthcare industry.  This 12-year ban affected Perdue Pharma executives, CEO Michael Freedman, General Counsel Howard Udell, and Chief Scientific Officer Paul D. Goldenheim, allegedly involved in a suit alleging the over marketing of OxyContin.  The three pleaded guilty to a misdemeanor count of misbranding a pharmaceutical but never admitted any wrongdoing.

The HHS ban of the three pharmaceutical executives was based on a statute that permits exclusion of an individual who has been convicted of a misdemeanor related to fraud.  The executives were never accused of fraud themselves, but the court held that the ban was permissible because there was some relationship between the executives’ supervisory responsibility and the underlying misconduct.  However, the appeals court held that the length that the 12-year ban was “arbitrary and capricious” and far exceeded penalties imposed in comparable cases.  As a result, the appeals court reversed the judgment of the trial court and ordered it to return to the case to HHS for a determination consistent with the appeals court’s opinion.

For more information, please see:
http://www.cadc.uscourts.gov/internet/opinions.nsf/459F3439969F140285257A48004F075C/$file/11-5028-1386058.pdf