Former Biotech CEO Harkonen convicted of wire fraud

The former chief executive of USA-based InterMune, W Scott Harkonen, has been 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 US Attorney's Office for the Northern District of California and the Civil Division of the Department of Justice has announced.

The jury, in its third day of deliberations, found the defendant guilty of wire fraud related to a press release issued on August 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 US District Court Judge Marilyn Hall Patel.

Under Dr 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 as a safe and effective treatment. The cost of Actimmune for one IPF patient for one year was around $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 August 28, 2002. Although the clinical trial in fact failed, Dr 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, the DoJ said in a statement. 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.

The maximum statutory penalty for wire fraud is 20 years in prison, a $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 US Sentencing Guidelines and the federal statute governing the imposition of a sentence.