U.S. Supreme High Court Won’t Review InterMune CEO’s Conviction for Federal Wire Fraud

 WASHINGTON, D.C. — (Mealey’s) U.S. Supreme Court on Dec. 16 declined to review the wire fraud conviction of the former chief executive officer of biotechnology company InterMune Inc. based on a press release about a drug clinical study that federal prosecutors allege was false and misleading (W. Scott Harkonen v. United States, No. 13-180, U.S. Sup.; See 5/16/13, Page 10).

In 2009, a jury in the U.S. District Court for the Northern District of California found W. Scott Harkonen, M.D., guilty of wire fraud for statements the company made in the 2002 press release. The press release reported the results of a clinical study the company conducted to test the effectiveness of its prescription drug Actimmune on patients with idiopathic pulmonary fibrosis (IPF).

The government alleged that the study actually failed to show that Actimmune significantly improved the survival rates of patients with IPF. It said that the release instead stated that the drug benefited IPF patients and that the results were presented to induce doctors to prescribe and patients to take Actimmune.

The District Court sentenced Harkonen to three years’ probation, 200 hours of community service and six months of home confinement.

‘Reasonably Disagree’

The Ninth Circuit U.S. Court of Appeals this year affirmed Harkonen’s conviction and denied his request for an en banc appeal.

In his August petition for a writ of certiorari, Harkonen asked the high court to determine whether a conclusion about the meaning of scientific data on which scientists may reasonably disagree qualifies as a false or fraudulent statement under the federal wire fraud statute. He also asked the court to decide whether applying the wire fraud statute to scientific conclusions “drawn from accurate data” violates the First Amendment’s prohibition against viewpoint discrimination or renders the wire fraud statute constitutionally vague.

Harkonen said the Ninth Circuit expanded the wire fraud statute to cover “debatable scientific conclusions” and that the ruling conflicts with the U.S. Supreme Court’s ruling in American School of Magnetic Healing v. McAnnulty (187 U.S. 92 [1902]) and other decisions from three other federal circuit courts. He said the expansion of the statute violates the First Amendment right to free speech and the due process clause of the U.S. Constitution.

Harkonen said that allowing his conviction to stand will “immediately, irreparably, and indefinitely chill scientific speech on matters of vital public concern.”

Data ‘Re-Analyzed’

Harkonen said the release, whose headlines touted the survival benefit of Actimmune and reduction of mortality, also stated that the study’s results for its primary endpoint were not statistically significant.

In its Nov. 8 opposition brief, the government said Harkonen’s characterizations of the press release lack merit. “The evidence showed that petitioner, despite being repeatedly told that the GIPF-001 trial was a failure, ordered that the unblinded clinical trial data be re-analyzed multiple times in a search for any positive result to report. When he finally found what he was looking for, he crafted a press release — which he did not allow his scientists to review — portraying the double-blind trial as a success,” the government said.

The government said the jury is entitled to conclude that in light of what was omitted, Harkonen’s statements were misleading. “Contrary to petitioner’s assertion, he was not convicted for “express[ing] a scientific conclusion about which reasonable minds can differ,” the government said.

“The press release did not simply put a ‘positive spin’ on results open to multiple interpretations, but lacked the basic ‘candor and disclosure’ necessary to understand the unreliable methodology underlying the conclusions it presented,” the government said. “To the extent that petitioner and his amici now claim that members of the scientific community would, in fact, have considered the press release an entirely non-misleading way of presenting the results of the study, they rely on facts outside the evidence heard by the jury.”

Harkonen Excluded

On the basis of his conviction, the federal government has excluded Harkonen from working for any company that does business with federal health care programs such as Medicare and Medicaid.

In 2012, InterMune sold Actimmune to another drug company.

Harkonen is represented by Carter G. Phillips, Rebecca K. Wood and Kathleen M. Mueller of Sidley Austin in Washington and Mark E. Haddad and Douglas A. Axel of Sidley Austin in Los Angeles.

The United States is represented by Solicitor General Dominick B. Verrilli Jr., Mythili Raman and Sangita K. Rao of the U.S. Justice Department in Washington.

Amicus Counsel

Amicus curiae Pharmaceutical Research and Manufacturers of America was represented by Lisa S. Blatt of Arnold & Porter in Washington. A group of scientists and academics who filed an amicus brief in support of Harkonen were represented by Becky Walker James of the Law Office of Becky Walker James in Pacific Palisades, Calif.

Amicus Abigail Alliance for Better Access to Developmental Drugs, writing in support of Harkonen, was represented by Daniel Meron of Latham & Watkins in Washington.

A group of law professors writing as amici in support of Harkonen were represented by Mark A. Perry of Gibson, Dunn & Crutcher in Washington.

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