Forest Pharmaceuticals, Obstruction of Justice, Misdemeanor Distribution, Massachusetts 2010

Forest Pharmaceuticals Sentenced to Pay $164 Million for Criminal Violations

Washington -- Drug manufacturer Forest Pharmaceuticals Inc. was sentenced today by U.S. District Judge Nancy Gertner to pay a criminal fine of $150 million and forfeit assets of $14 million following the company's guilty plea in November 2010 to one felony count of obstructing justice, one misdemeanor count of distributing an unapproved new drug in interstate commerce and one misdemeanor count of distributing a misbranded drug in interstate commerce.

The company, a subsidiary of New York City-based Forest Laboratories Inc., pleaded guilty to charges related to obstruction of an FDA regulatory inspection, to the distribution of Levothroid, which at the time was an unapproved new drug, and to the illegal promotion of the anti-depressant drug Celexa for use in treating children and adolescents.

Today's sentencing of Forest was the final component of a global resolution totaling more than $313 million to resolve criminal and civil allegations against Forest and its parent company in connection with the distribution and marketing of certain drugs. In September 2010, Forest Laboratories and Forest Pharmaceuticals entered a civil settlement to resolve False Claims Act charges involving three of its drugs: Levothroid, Celexa and Lexapro. As part of the civil settlement, Forest agreed to pay more than $149 million, including more than $88 million to the federal government and more than $60 million to the states.

According to court documents, Forest Pharmaceuticals began distributing Levothroid for treatment of hypothyroidism in the early 1990s without first obtaining Food and Drug Administration (FDA) approval. In 1997, the FDA, after determining that the drugs were medically necessary, gave manufacturers a certain amount of time to conduct the necessary studies and obtain FDA approval. In 2001, the FDA stated that it would continue to permit manufacturers of unapproved levothyroxine sodium drugs to distribute their unapproved drugs after Aug. 14, 2001, on certain conditions. One of those conditions was that any manufacturer which had not obtained approval needed to comply with a gradual distribution phase-down of its unapproved drug until it obtained FDA approval.

According to court documents, Forest made a deliberate decision to continue distributing its unapproved Levothroid product in quantities far exceeding the amounts permitted by the FDA's distribution phase-down plan.

The FDA sent a warning letter to Forest Pharmaceuticals on Aug. 7, 2003, informing the company that it was no longer entitled to distribute its unapproved Levothroid product.

According to prosecutors, after Forest received the letter, the company directed its employees at its St. Louis distribution center to work overtime until approximately 1:00 a.m. the following morning and, during that time, to continue shipping as much of its unapproved Levothroid as possible.

Court documents also indicate that Forest obstructed an FDA regulatory inspection relating to Levothroid at Forest's Cincinnati plant in November 2003. According to prosecutors, management personnel at the Cincinnati plant were aware that serious equipment malfunctions had resulted in testing conditions that, for hundreds of days and thousands of hours, did not comply with the FDA's requirements for Levothroid that had been manufactured for research purposes. Prosecutors stated that in an attempt to remedy this problem, certain Forest management personnel at the Cincinnati plant decided to use a portable home humidifier in the testing room as a temporary fix. Later, when FDA inspectors saw this humidifier in the testing room during a regulatory inspection of the plant, certain management personnel falsely told the investigators that the portable humidifier was merely being stored in the room and had not been used for humidity control. This conduct was the basis for the felony obstruction charge to which Forest pleaded guilty.

Forest Pharmaceuticals, a subsidiary of New York City-based Forest Laboratories Inc., pleaded guilty to one felony count of obstructing justice, one misdemeanor count of distributing an unapproved new drug in interstate commerce and one misdemeanor count of distributing a misbranded drug in interstate commerce.

Defendant: Forest Pharmaceuticals Inc.

Criminal Charges: Obstruction of justice, misdemeanor distribution of an unapproved new drug, misdemeanor distribution of a misbranded drug

City and State: Washington

Date: November 2010

Sentence: Forest was sentenced to pay a criminal fine of $150 million and forfeit assets of $14 million

Dollar Amounts: $150 million fine, $14 million assets forfeited, $313 million global resolution, $149 million civil settlement, $88 million to the federal government, $60 million to the states

Source: https://www.justice.gov/archives/opa/pr/forest-pharmaceuticals-sentenced-pay-164-million-criminal-violations