United States v. Aegerion Pharmaceuticals, Inc.

280 F. Supp. 3d 217
CourtDistrict Court, D. Massachusetts
DecidedNovember 20, 2017
DocketCRIMINAL ACTION NO. 17-10288-WGY
StatusPublished
Cited by2 cases

This text of 280 F. Supp. 3d 217 (United States v. Aegerion Pharmaceuticals, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Aegerion Pharmaceuticals, Inc., 280 F. Supp. 3d 217 (D. Mass. 2017).

Opinion

MEMORANDUM & ORDER

WILLIAM G. YOUNG, DISTRICT JUDGE

Let’s see if I’ve got this straight.1

Aegerion Pharmaceuticals, Iric. (“Aeger-ion”) developed an effective medicine, called Juxtapid, to treat high cholesterol in people with a rare genetic disease. The treatment did not come cheap. “At market launch in January 2013, Juxtapid cost roughly $295,000 per patient per year. The annual cost of Juxtapid later increased to over $330,000 per patient per year.” Infor-, mation, ¶ 19.

Thereafter Aegerion engaged in a series of unfair and deceptive acts, including outright fraud, which pervaded corporate management, all designed to increase the use of Juxtapid in circumstances where such treatment was not medically indicated. Aegerion wrongfully received a great deal of money from this corporate criminal conduct. 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. Information, ¶ 37-39. Indeed, “[n]umerous HeFH, statin-intolerant, ’ and diabetic patients, including elderly and pediatric patients suffered adverse events, including liver toxicity and gastrointestinal distress, and had to discontinue use of Juxtapid,” Information, ¶ 39. '

Facing two misdemeanor counts of introducing misbranded drugs into interstate commerce, Aegerion now seeks to plead guilty,2 pursuant to Fed. R. Grim. P. 11(c)(1)(C) (the “ ‘C’ plea”). Under a “C” plea, the judge’s choice at sentencing is limited to- imposing the sentence agreed between the government and the offender or rejecting the plea altogether. Id. at 11(c)(3)(A). The judge, of course, is forbidden from engaging in- the plea bargaining itself. Id, at 11(c)(1). 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, Inc., 956 F.Supp.2d 316 (D. Mass. 2013), 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. Id. at 331-37.

As this case illustrates, the issues presented by the “C” plea in the corporate context are more disquieting than I had originally thought.

To begin:

Here, there is much--to commend the proffered plea; unfortunately much of it remains sealed so as not to compromise on-going criminal investigations. It suffices here to say that Aegerion’s top management has undergone a near complete makeover and that its cooperation with the government’s law enforcement efforts is truly extraordinary.

That said, in-light of the larger issues discussed below, it is the duty of this Court candidly to explain the issues it has with this proffered “C” plea. This Court is not bargaining with the parties. None of these points — singly, or together — is necessarily a deal breaker. Each one is a consideration — and perhaps I,.may, well not yet have considered every relevant.issue.

Oh, Aegerion amended “C” plea—

How do I dislike thee?

Let me count the ways:

• 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?
• Are the Sentencing Guidelines properly calculated? Why is there no enhancement for vulnerable vic- , tims? U.S.S.G. § 3Al.l(b)(l). 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 mar- ■ keting- Juxtapid for off-label • uses to sophisticated physicians.' One can readily infer that such false marketing was itself sophisticated.3
•' Assuming without concluding that the Sentencing Guidelines are properly - calculated, -the reeom-mended fíne range is not less than $18, 542,192 to $30, 903, 653. Even so, the “C” plea calls for a fine of only $6, 200, 000 paid in installments and forfeiture of $1, 000, ’000. The parties justify the downward variance by pointing to the extraordinary cooperation of Ae-gerion’s new ’management and its present precarious financial condition.
What is left unexplained,is why the government does not simply let Ae-gerion collapse in disgrace. Surely Ae-gerion 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 fíne, and the forfeiture? Couldn’t No-velion 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.
• Most problematic, this “C” plea provides not one cent of restitution to the actual 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? The parties aver “that the complication and prolongation of the sentencing process that would result from an attempt to fashion a proper restitution order under 18 U.S.C. § 3663 outweighs the need to provide restitution to any non-governmental victims in this case.” Plea Agreement, 5d. Really?
Why? The parties are utterly silent on this point. Indeed, in light of this Court’s management of the In Re Relafen Antitrust Litigation, 231 F.R.D. 52, 64 (D. Mass. 2005), it hardly seems an insurmountable burden to find out who got Juxtapid when such medication was not clinically indicated. After all, the parties agree Aegerion’s gross gain is $15,451,827.
• This “C” plea obligates the government not to undertake any further prosecution of Aegerion.

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Bluebook (online)
280 F. Supp. 3d 217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-aegerion-pharmaceuticals-inc-mad-2017.