Appeals Court Rejects Drug Company Executive’s First Amendment Defense and Upholds Wire Fraud Conviction

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A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit, in a recent unpublished opinion, upheld the conviction and sentencing of former InterMune, Inc. executive Scott Harkonen for wire fraud.  In 2009, a jury convicted Harkonen for his role in an InterMune press release that claimed one of its drugs, Actimmune, effectively treated patients for idiopathic pulmonary fibrosis—an unapproved indication (or “off-label” use).  The district court sentenced Harkonen to three years probation and ordered him to pay a $20,000 fine.

On appeal, Harkonen challenged his conviction on First Amendment grounds, arguing that the press release at issue constituted protected speech.  Because First Amendment protections do not extend to fraudulent speech, the court assessed whether the jury’s factual findings established that the press release was fraudulent.  The court concluded that the evidence at trial supported a finding that it was, reasoning that there was sufficient evidence to show the press release misrepresented the results of clinical analyses of Actimmune; Harkonen knew the press release was misleading; the press release was capable of influencing a doctor’s decision to prescribe; and Harkonen had the specific intent to defraud (i.e., to boost sales of the drug).  The court also rejected Harkonen’s argument that his conviction should be overturned because he was engaging in a genuine scientific debate as to the drug’s efficacy—removing his conduct from the scope of the wire fraud statute—saying it was unwilling to disregard the jury’s finding that Harkonen acted with the specific intent to defraud.

In two related lawsuits, Harkonen is challenging his five-year exclusion from participation in federal health care programs and is suing the Department of Justice in connection its issuance of a press release regarding Harkonen’s conviction.

The case is United States v. Harkonen, No. 11-10209 (9th Cir.), and you can view the March 4 unpublished opinion upholding Harkonen’s conviction here.

Reporter, Greg Sicilian, Atlanta, +1 404 572 2810, gsicilian@kslaw.com.