Around the same time that Howard Solomon decided that he will soon retire as the long-standing ceo at Forest Laboratories, the drugmaker received a subpoena from the US Department of Justice concerning its Turdorza Pressair treatment for chronic obstructive pulmonary disease. Specifically, the subpoena arrived on May 6, and Solomon announced his pending departure on May 23.
The timing may be coincidental and there was scant information released about the subpoena, other than that the drugmaker claims to be cooperating with the feds (see page 28). But the disclosure is an embarrassment for Forest Labs, given its recent history with marketing practices and the ensuing difficulties this caused Solomon two years ago.
In 2010, Forest Labs pleaded guilty to obstruction of justice, distributing an unapproved drug and illegally promoting two other meds. The drugmaker settled the charges by agreeing to pay $ 313 million, which included $ 164 million in criminal penalties (see this). And a five-year Corporate Integrity Agreement was signed in which Forest Labs was to have established procedures and accountability to ensure a repeat was avoided.
Nonetheless, the feds later sought to exclude Solomon from participating in federal healthcare programs,such as Medicare and Medicaid, which would have robbed Forest Labs (FRX) of lucrative and much-needed contracts. The feds later backed down, though, thanks, in part, to lobbying from US Senator Chuck Schumer, according to sources.
In announcing his retirement, which is scheduled to take place by the end of the year, the 85-year-old Solomon acknowledged that it was time for a younger ceo to preside (back story). And that is…Read more