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UNITED STATES v. LEVINE

August 19, 1994

UNITED STATES OF AMERICA
v.
JEFFREY M. LEVINE, Defendant.



The opinion of the court was delivered by: THOMAS PENFIELD JACKSON

 The United States charges in a two-count indictment that the defendant Jeffrey Levine ("Levine") committed perjury on September 11, 1989, while testifying before the Subcommittee on Oversight and Investigations of the House of Representative's Committee on Energy and Commerce ("Subcommittee"), in violation of 18 U.S.C. § 1621. The government also charges that Levine made a false statement to the staff of the Subcommittee in a written submission furnished to the Subcommittee in advance of his testimony, in violation of 18 U.S.C. § 1001. Levine has moved to dismiss both counts of the indictment.

 I.

 In 1984 Congress passed the Drug Price Competition and Patent Term Restoration Act, Pub. L. 98-417, which streamlined the regulatory procedure by which pharmaceutical companies could bring to market generic copies of previously approved drugs. This legislation permitted pharmaceutical manufacturers to submit "Abbreviated New Drug Applications" ("ANDAs") to the Food and Drug Administration ("FDA") for swift review and marketing approval for their products. *fn1" The nature of the generic drug industry is such that the pharmaceutical company that is first able to introduce its product to the marketplace acquires a significant economic advantage over competitors. The market advantages conferred by being the first to offer a drug for sale are temptations to abuses of the approval process, including, inter alia, illegal payments to FDA officials for preferential approval of ANDAs.

 In 1988 the Subcommittee, FDA, and the U.S. Attorney's Office for the District of Maryland initiated separate investigations into such corrupt practices. The Subcommittee began public hearings in May, 1989, while the criminal probe by the U.S. Attorney had already resulted in agreements to plead guilty by certain pharmaceutical companies, their officers, and FDA officials, in the United States District Court for the District of Maryland.

 Of direct concern to this case, the U.S. Attorney for Maryland had succeeded in obtaining an agreement to plead guilty from an official of Par Pharmaceutical, Inc. ("Par Pharmaceutical"), of which the defendant Jeffrey Levine was an Executive Vice-President. Ashok Patel, a senior Vice-President of Par Pharmaceutical agreed to plead guilty on April 7, 1989, to making an illegal gratuity payment to an FDA branch chief. On April 13, 1989, a review chemist in the Division of Generic Drugs at FDA, also agreed to plead guilty to receiving gratuity payments from both Patel and Dilip Shah, the President of Quad Pharmaceutical, Inc. ("Quad Pharmaceutical"), a subsidiary of Par Pharmaceutical. On July 11, 1989, Par Pharmaceutical agreed to plead guilty to providing an illegal gratuity to an FDA official. Patel actually entered his guilty plea on July 17, 1989, at which the Fed. P. Crim. P. 11 proffer stated that he had been involved in a scheme with Shah to pay gratuities to FDA officials on behalf of Par Pharmaceutical and Quad Pharmaceutical in conjunction with the submission of ANDAs for generic drugs which these companies aspired to bring to market.

 By the time the Subcommittee began its public hearings on May 3, 1989, it had already interviewed scores of FDA officials, Department of Health and Human Service employees, and others in the private sector, and had also reviewed "tens of thousands" of pages of documents. In addition, the Subcommittee was also aware of the successful criminal investigations conducted by the U.S. Attorney's Office in Maryland, including the involvement of Par Pharmaceutical and Quad Pharmaceutical officials in the generic drug scandal.

 Executives of Par Pharmaceutical, including defendant Levine, met with staff members of the Subcommittee on July 17, 1989, to explain the scope of their companies' participation in the illegal payments conspiracy. Par Pharmaceutical officials stated to the staff that only two of its officials, Patel and Shah, had been engaged in any illegal activities with respect to ANDA applications submitted to the FDA. However, on July 20, 1989, legal counsel for Par Pharmaceutical suggested to the Subcommittee that Jeffrey Levine may have assisted in suppressing evidence of other unlawful conduct by Patel, namely, the substitution of certain drug test data during a recent FDA inspection.

 The Subcommittee issued subpoenas to Par Pharmaceutical and Quad Pharmaceutical employees, including to defendant Levine, on August 4, 1989. By this time, members of the Subcommittee had reason to suspect that Levine had misled its staff at the July 17, 1989 meeting, and those misgivings are evidenced by a letter written on September 7, 1989, to Judge John Hargrove of the U.S. District Court of Maryland, in which Congressmen John Dingell and Thomas Bliley, the Chairman and ranking minority member, respectively, of the Subcommittee, asserted that Levine had "attempted to mislead Subcommittee staff. . . ." *fn2" Congressman Dingell also opined in a memorandum to staff on September 8, 1989, that "Levine should have had knowledge of [the illegal payments]," and again repeated the contention that the defendant had misled the Subcommittee staff on July 17, 1989.

 Before testifying on September 11, 1989, defendant Levine voluntarily furnished a written declaration to the Subcommittee which he insisted be placed in the hearing record, and in which he stated that Par Pharmaceutical and Quad Pharmaceutical had "made mistakes." Levine also wrote that:

 
* * * * *
 
. . . There is no evidence that any individual other than the two who have pleaded guilty and are not now with the companies, were knowingly involved in the [illegal gratuity] payments.3

 The Subcommittee's hearings on September 11, 1989, devoted attention to the illegal activities of Par Pharmaceutical and Quad Pharmaceutical. FDA inspectors first testified that their investigation revealed that the companies had not only engaged in making illegal gratuity payments, but had also submitted false or altered data ...


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