Forest Unit Agrees to Plead Guilty, Pay $313 Million

A Forest Laboratories Inc. (FRX) unit agreed to plead guilty and pay $313 million for distributing its Levothroid thyroid drug before it was approved by the Food and Drug Administration, the U.S. Department of Justice said.

The allegations also involved illegal promotion of Celexa for use in treating children and adolescents suffering from depression, the Justice Department said in a statement. The Forest Pharmaceuticals unit also agreed to settle allegations it caused false claims to be submitted to federal health-care programs for Levothroid, Celexa and Lexapro, an anti-depressant.

The company will pay a $150 million criminal fine, forfeit $14 million, and pay more than $149 million to the federal government and to state Medicaid programs to settle the False Claims Act allegations, according to the statement.

“Forest Pharmaceuticals deliberately chose to pursue corporate profits over its obligations to the FDA and the American public,” U.S. Attorney Carmen Ortiz in Boston said in the statement. “The company knew that it did not have FDA approval to distribute Levothroid.”

Howard Solomon, chief executive officer of New York-based Forest Laboratories, said in a statement, “We are pleased to bring closure to this long-running investigation.”

“We remain dedicated to ensuring that we operate in full compliance with all laws and regulations, and that our employees uphold the highest principles of integrity, honesty and ethics,” he said.

Forest Denied Wrongdoing

Forest denied any wrongdoing in connection with the civil claims.

The False Claims Act lets private citizens sue on behalf of the government and share in any recovery. Several whistleblowers will split at least $14.6 million, according to a statement by Nolan & Auerbach, a law firm in Fort Lauderdale, Florida.

One of the whistleblowers, former Forest sales representative Christopher Gobble, sued the company in March 2003, according to a statement by his law firm, Wilbanks & Bridges LLP of Atlanta.

“I had no idea when I was fired from my sales representative job in June of 2002 that the next eight years of my life would be so challenging,” Gobble said in the statement. “I lost my dream job and the chance to work in the pharmaceutical business when I became a whistleblower.”

Drug companies, he said, “should not pay kickbacks to referring doctors or market drugs for off-label purposes to children.”

To contact the reporters on this story: William McQuillen in Washington at bmcquillen@bloomberg.net; David Voreacos in Newark at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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