Updated 4:11 p.m.
In a split decision Friday, the U.S. Court of Appeals for the D.C. Circuit has overturned part of the penalty against former senior officials of Purdue Pharma L.P.
The three judge panel — consisting of Chief Judge David Sentelle, Senior Judge Douglas Ginsburg and Senior Judge Stephen Williams — overturned a 12-year exclusion from working in the pharmaceutical and health care industry for former Purdue Chief Executive Officer Michael Friedman, general counsel Howard Udell and medical director Paul Goldenheim. Purdue was convicted of fraudulent misbranding of its drug OxyContin as a less addictive alternative to other drugs. The trio was convicted of misdemeanor misbranding. Friedman, Udell and Goldenheim appealed the U.S. Department of Health and Human Services' ban, which was upheld by the district court.
Ginsburg wrote the court's opinion, with Sentelle and Williams concurring and dissenting in part.
“We do not suggest the Appellant’s exclusion for 12 years based upon a conviction for misdemeanor misbranding might not be justifiable; we express no opinion on that question. Our concern here is that the [Departmental Appeals Board] did not justify it in the decision under review. Simply pointing to prior cases with the same bottom line but arising under a different law and involving materially different facts does not provide a reasoned explanation for the agency’s apparent departure from precedent.…The Secretary's decision…was arbitrary and capricious with respect to the length of their exclusion because it failed to explain its departure from the agency's own precedents," Ginsburg wrote in the majority opinion.
Sentelle, in his opinion, concurred that the statute gave HHS Secretary Kathleen Sebelius the power of exclusion of the executives. He did however, take issue with the decision regarding the length of the exclusions.
"The majority points to no finding lacking substantial evidentiary support and no departure from law," Sentelle wrote. "Therefore, the statute should compel a result affirming the Board, as was entered by the district court. That should leave us no avenue but affirmance of the district court."
Williams did not agree that Sebelius' interpretation was a valid one, and would have remanded the case to the district court for a permissible interpretation. "If her action is valid on its own terms, however, as the court holds, I agree on the remand for the purposes stated by Judge Ginsburg — for the Secretary to explain the departure from prior precedents in fixing the terms of exclusion," Williams wrote.
The government found no evidence that the three executives either knew about the misbranding nor participated in it.
In an interview, Sidley Austin partner Carter Phillips, who represented Friedman, Udell and Goldenheim, said that the case is being sent back to Sebelius rather than to the district court. He also applauded the court's decision.
"I think the 12 years was out of bounds, and it certainly is gratifying to see the panel describe it in that way," Phillips said. "It was effectively a professional death penalty."
A spokesman for the U.S. Attorney's office for the District of Columbia declined to comment.