Forest Settles Criminal Investigation Over Illegal Drug Marketing: Biotech's Latest Mishaps
The Burrill Report submits: Forest Pharmaceuticals (FRX) has agreed to pay more than $300 million to settle charges stemming from a multiyear criminal investigation by the U.S. Food and Drug Administration over illegal marketing of drugs. The FDA, working in coordination with the U.S. Department of Justice, said that Forest Pharmaceuticals entered into a plea agreement in which the company accepted responsibility for criminal actions including distribution of an unapproved new drug, distribution of a misbranded drug, and obstruction of an FDA inspection. The settlement included $164 million in criminal penalties. Charges against Forest were primarily for its marketing of Levothroid, an unapproved drug used for the treatment of hypothyroidism. Arena Pharmaceutical’s (ARNA) shares plunged nearly 40 percent after a U.S. Food and Drug Administration advisory committee rejected its proposed weight loss drug lorcaserin. The reviewers expressed concern that potential risks of long-term use outweighed its benefit of modest weight loss. A briefing document issued two days earlier noted that the drug caused cancer in lab rats and succeeded by just “a slim margin” in meeting the FDA’s expectations for weight management. That news spurred a sell-off that drove Arena's shares down 38 percent as investors fretted over how the FDA's Endocrinologic & Metabolic Drugs Advisory Committee would vote. The committee’s recommendation often guides the FDA’s final decision on whether or not to grant marketing approval. Complete Story »
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