Judge Rips Aegerion Corporate Crime Settlement Sends Case to Trial

Of course, it took a federal judge appointed by Ronald Reagan to expose in a court decision our two tier system of criminal justice — one for individuals and one for corporations.

Judge William Young

Judge William Young in Boston last week tossed a corporate criminal settlement between the Justice Department and the pharmaceutical company Aegerion, a unit of Novelion Therapeutics, and sent the case to trial.

Aegerion developed a drug, Juxtapid, to treat high cholesterol in patients with a rare genetic disease. The patients pay more than $300,000 a year for the drug.

Aegerion engaged in a series of deceptive acts, including fraud, all designed to increase the use of the drug in cases where treatment was not medically indicated.

To resolve the criminal charges, Aegerion pled guilty and paid $35 million to settle the case.

Aegerion was represented by Joshua Levy of Ropes & Gray in Boston.

Clearly outraged by the terms of the deal, Judge Young opens with “Let’s see if I got this straight.”

“Aegerion wrongfully received a great deal of money from this corporate criminal conduct,” Judge Young wrote “Still more important, it appears that Aegerion knowingly induced the prescription of Juxtapid to many patients for which it would do no good, thus crowding out more promising therapies.”

Many patients suffered adverse effects, including liver toxicity and gastrointestinal distress, and had to discontinue use of Juxtapid.

What displeased Judge Young about the plea agreement?

“The fact that it was a C Plea — or a plea under Federal Rules of Criminal Procedures 11(c)(1)(C), under which “the judge’s choice at sentencing is limited to imposing the sentence agreed between the government and the offender or rejecting the plea altogether,” Judge Young wrote.

“The judge, of course, is forbidden from engaging in the plea bargaining itself. These two requirements conflict whenever a court is inclined to reject a C plea since an unexplained rejection smacks of personal fiat and any explanation sounds like court interference in the parties’ good faith bargaining. There is no easy course.”

“Seeking to avoid this difficulty, this Court in United States v. Orthofix thoroughly considered the issues and explained its conclusion that the C plea has no place, save in the rarest circumstances, in the context of corporate criminal pleas,” Young wrote.

“Oh, Aegerion amended C plea,” Judge Young wrote.

“How do I dislike thee?”

“Let me count the ways.”

No pre-sentence report.

“The government agrees that sentencing may take place immediately upon this Court’s acceptance of the C plea even without the preparation of a pre-sentence Report. Why? One can readily understand why Aegerion wants its plea and sentence to be a one-day story, soon forgotten. Why does the government agree? Isn’t it better to permit the Court to obtain a thorough pre-sentence Report from its own Probation Office the better to understand this complex case?”

No enhancement of sentence for vulnerable victims.

“Are the Sentencing Guidelines properly calculated? Why is there no enhancement for vulnerable victims? One would think that the marketing of misbranded drugs to a patient population in need of appropriate treatment would meet the quintessential definition of vulnerable victims. Is there no enhancement for the use of sophisticated means to commit the crimes? After all, the scheme here involved falsely marketing Juxtapid for off-label uses to sophisticated physicians. One can readily infer that such false marketing was itself sophisticated.”

Aegerion too big to fail?

“What is left unexplained is why the government does not simply let Aegerion collapse in disgrace. Surely Aegerion is not too big to fail. After all, its stock apparently is now owned by Novelion, Inc., an innocent investor but one knowledgeable of Aegerion’s criminal conduct at the time of its investment. Couldn’t an asset sale to Novelion fund the civil settlement, the fine, and the forfeiture? Couldn’t Novelion pick up Aegerion’s employees? After all, Juxtapid is an FDA approved medicine with an appropriate therapeutic value. Perhaps these questions do not make economic, real world sense. The point is, I do not know and the proffered C plea does not begin to explain the financial picture in detail. Apparently the parties think their representations suffice. They do not. I have a job to do – an independent judicial responsibility I may not delegate to others.”

Not one cent of restitution for individual victims.

“This result is justified say the parties by the multi-million dollar proposed settlement between Aegerion and the third party payors, federal and state, who were fleeced into paying for misbranded drugs. Thus, governmental actors (who inferentially provided most of the purloined funds) get partial repayment but the actual victims, many of whom suffered medical complications and physical and emotional harm, get nothing.

How can I possibly justify such a result?

What is the government trading away here?

“This C plea obligates the government not to undertake any further prosecution of Aegerion. What is the government trading away here? Why? What other companies may be implicated? None of this information is provided. Are we not concerned we may be foisting misbranded drugs on innocent and unsuspecting victims in other nations without adequate notification to their regulatory authorities?

Why no probation officer?

“The proffered C plea includes a comprehensive — and in this Court’s mind adequate — internal compliance and review program to prevent any recurrence of this wrongdoing. The problem is that the proposed program is entirely internal. There is no provision for the Court’s personnel — or some independent employee — independently to examine compliance much like an on-site bank examiner. Even with strict compliance, independent evaluation provides valuable insight.”

But beyond the particulars, Judge Young rested his decision on the ultimate  non-Reaganite argument.

Our criminal justice favors corporations over individuals.

“I am ashamed I had not recognized this glaring inequity until this case,” Judge Young writes.

Judge Young opens with a “Roster of Criminal Pharmaceutical Corporations.”

Warner Chilcott Sales U.S. (LLC)

GlaxoSmithKline LLC

Merck Sharp & Dohme Corp.

Elan Pharm., Inc.

SB Pharmco Puerto Rico, Inc.

Forest Pharm, Inc.

Ortho-McNeil Pharm., LLC.

Pharmacia & Upjohn Co.

Biovail Pharm. Inc.

Bryan Corp.

Schering Sales Corp.

Serono Laboratories, Inc.

Warner-Lambert Co. LLC

Bayer Corp.

TAP Pharm. Products, Inc.

Judge Young says that Aegerion makes the argument — hey, they got C pleas, why shouldn’t we?

“Like these corporations, we — Aegerion — are a criminal pharmaceutical corporation,” Judge Young wrote. “They all got C pleas. Therefore we should too – it’s forbidden disparity if we don’t.”

“This argument is silly – complete balderdash,” Judge Young writes. “The disparity addressed by the Sentencing Reform Act of 1984 and the jurisprudence that follows it deals with unwarranted disparity among sentences actually imposed, not the analyses the judges used to get there.”

“Aegerion has, however, proved a different type of unwarranted disparity — the shocking disparity between the treatment of corporations and individuals in our criminal justice system. I am ashamed I had not recognized this glaring inequity until this case.”

“Passing without further comment the truly breathtaking extent of pharmaceutical corporate criminality revealed by the ‘roster’ above, Aegerion proves beyond peradventure that a forbidden two-tier system pervades our courts. Corporations routinely get C pleas after closed door negotiations with the executive branch while individual offenders but rarely are afforded the advantages of a C plea. Instead, they plead guilty and face a truly independent judge. This is neither fair nor just; indeed, it mocks our protestations of ‘equal justice under law.;’”

“It’s not hard to understand why corporations facing criminal charges seek C pleas. It gives them various advantages, including the most effective damage control.”

“Save when they are themselves on the attack, seeking to enforce their own property rights, corporations today seek to avoid the legal system altogether.

“Small wonder, then, that corporations seek the same cozy model — and act as though it is their due — even when facing serious criminal charges.”

“Consider the advantages to the corporation of the C plea: All negotiations are private. No charges are brought until the plea deal is finalized so the risk of investigative journalism is minimized. All aspects of the sanction are negotiated so there will be no surprises from the judiciary. As the record here makes clear, the likelihood of the judge turning down the C plea is virtually non-existent. In a best case scenario, the court will perform the plea colloquy with a lower level functionary and will immediately impose the agreed upon sanction. Case over – in the vernacular of the days of the print journalism, ‘a one day story, second section, below the fold.’”

Judge Young wants corporate criminal cases to go to trial.

“The verdict of an American jury has a moral force incomparably greater than any plea,” Judge Young wrote. “That’s why corporations are so desperate to avoid them. Corporate pleas involve well-educated elites talking to other equally well educated elites. Things are said, sanctions imposed, nothing really happens. Prices do not come down. Consumers gain no perceptible benefit. Corporations march on, apparently impervious to government regulation or the law itself. Contrast an actual trial: every trial is a public morality play — perhaps a story of greed and avarice or amoral chicanery, all of it played out live upon actual understandable evidence before twelve public judges largely chosen at random. The result is the fairest, most incorruptible, democratic expression of justice humankind has ever known.”

Given this record, Judge Young ruled that the Aegerion plea “simply is not in the public interest.”

“There are just too many unknowns here and the C plea process itself unduly hobbles this Court’s sworn constitutional duty to ‘do equal right to the poor and to the rich.’”

“I end as I began. I am not bargaining with anyone. The problem is the C plea process itself. Indeed, as I have already said, there is much in the proffered plea agreement to commend. Moreover, there is here not a scintilla of evidence of collusion among the parties. This does not appear to be a sweetheart deal. Were this Court to have a free hand, I might well sentence Aegerion to virtually the same sentence as the parties here urge on the Court — that’s what happened in Orthofix — or I might not. I simply do not know because, as yet, the parties have deprived me of that responsibility, perpetuating an improper and unjust two-tier system that erodes public confidence in the sentence to be imposed. . .”

“This case will stand for trial as previously ordered.”


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