Forest Laboratories Inc. (FRX) Chairman and Chief Executive Officer Howard Solomon, whose company paid $313 million to settle a U.S. fraud case last year, is the latest pharmaceutical executive facing a ban from doing business with federal health programs.
Forest and Solomon were notified of the action in an April 12 letter from the Office of Inspector General at the Department of Health and Human Services, the New York-based drugmaker said in a statement. Former KV Pharmaceutical Co. (KV/A) Chief Executive Officer Marc Hermelin resigned as a director last year after he became the first drug-company owner or executive barred from doing business with Medicare, the U.S. health plan for the elderly and disabled, and Medicaid, the program for the poor.
The exclusions are part of a broader effort to make executives and owners more accountable for companies’ actions and reduce fraud in the U.S. health programs, regulators announced last year. The Department of Health and Human Services has had the authority to ban company officials since 1996 and has moved against 28 individuals since then, the agency said in November.
“It would be completely unwarranted to exclude a senior executive against whom there has never been any allegation of wrongdoing whatsoever,” William Candee III, a Forest director, said in the company’s April 13 statement. “We are hopeful that HHS-OIG will decide that the facts and circumstances as to Mr. Solomon do not warrant an exercise of its exclusion authority.”
Solomon has 30 days from receipt of the letter to respond and plans to contest the regulator’s effort to forbid him from doing business with the health programs, Forest said in its statement.
The HHS inspector general’s office issued guidelines last October about how it planned to use its power to pursue company executives in fraud cases. Eric Blumberg, deputy chief for litigation at the Food and Drug Administration, said at the same time that regulators also would begin using their legal powers to exclude executives when companies were convicted of so-called off-label marketing in which a drug is promoted for an unauthorized use.
Frank Murdolo, Forest vice president of investor relations, didn’t respond to a voice message requesting an interview. Hugh Burns of the public-relations firm Sard Verbinnen & Co. in New York, which represents the drugmaker, declined to comment. Donald White, a spokesman for the HHS inspector general’s office, also declined to comment.