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Executive Summary

Former FDA Division of Generic Drugs Director Marvin Seife, MD, was found guilty on Oct. 31 of two counts of perjury related to previous statements he had made about meals accepted from industry. It took the Baltimore jury of six women and six men just four hours to find the 18-year head of FDA's generic drug review section guilty of two counts of perjury. The jury based its decision on six days of testimony. The trial ran from Oct. 23-30. Baltimore federal Judge John Hargrove has scheduled Seife's sentencing for Jan. 23. Defense counsel Hamilton Fox (D.C. law firm of Sutherland, Asbill and Brennan) said he will await the outcome of the sentencing before making a decision on whether to appeal the verdict. Each perjury count carries with it a maximum penalty of five years in jail and a $250,000 fine. Current sentencing guidelines for federal perjury cases carry a minimum sentence of 12 to 18 months; however, Seife could receive a concurrent sentence for the two counts. According to the Maryland U.S. Attorney's Office, a work-release sentence is not an opinion. The judge may increase the sentence if he thinks that Seife obstructed the government's investigation of wrongdoing in the generic drug industry. The U.S. Attorney's Office said it has not decided whether to press for obstruction of an investigation in its sentencing recommendations. Mitigating circumstances in Seife's favor are his age, 66; his government service of 25 years; and various health problems. He also has received praise in the past from Rep. Dingell's staff for helping in the generic investigation (see box, p. 4). Even if Seife is sentenced to the minimum time of 12 months, he will have received one of the stiffest penalties so far in the generic drug scandal. The four former FDAers who have pleaded guilty to receiving illegal gratuities from company execs received sentences that involved work release, but no jail time. Former FDA review chemist Charles Chang, who pleaded guilty to receiving over $78,000 in illegal gratuities from various industry reps, was sentenced to one-year work release, a $10,000 fine, plus probation and 1,000 hours of community service ("The Pink Sheet" Oct. 9, 1989, T&G-4). Walter Kletch and David Brancato, also former review chemists in the generic division, both received 30-days work release for acceptance of illegal gratuities. The only individuals involved in the generic scandal to have received jail sentences are former American Therapeutics consultant Mohammed Azeem and former ATI President Raju Vegesna. In June, Azeem was sentenced to six months in prison for giving thousands of dollars of illegal gratuities to five or six FDA employees. Vegesna, who was sentenced in July for giving over$60,000 to four generic division staffers, was to have begun serving a two-year jail term on Sept. 26. However, he was granted leave by the court to travel to India before beginning his sentence and has not yet returned to the U.S. On Oct. 31, the Maryland U.S. Attorney's Office filed a warrant for his arrest, and said it plans to file extradition papers with the Indian government. During the trial, the jury received evidence and heard testimony from FDA officials, industry representatives, case investigators and Seife himself concerning two statements made by the former generics head to FDA investigators in October 1989. In a signed statement for the investigators, Seife denied having lunch with former Warner-Lambert VP-Regulatory Affairs Milton Kaplan and former My-K Pharmaceuticals President Kun Chae Bae on Dec. 11, 1987. Seife also told investigators that, since 1980, he made it a practice never to have meals with regulated industry. In closing arguments, Assistant U.S. Attorney Geoffrey Garinther launched a broad attack against the former generics director, asserting that Seife presided over an "unprecedented level of mismanagement and corruption that almost brought down the generic industry." U.S. Attorney Breckrinridge Willcox maintained that "Marvin Seife set the moral tone for the division of generic drugs." Seife was "arrogant" and considered himself "above the law," Willcox asserted, noting that this case is about "the corruption of arrogance." Seife lied, Willcox argued, because he wanted to avoid an investigation. Willcox contended that the generics director still "harbored hope" that he might return to his former post or leave the agency with an intact reputation. Willcox also ridiculed the "aspirin defense" used by Seife's attorney to imply that his concentration was affected by extra doses of aspirin he was taking for his shoulder pain around the time of the Oct. 25, 1989 interview with FDA investigators. Defense attorney Fox countered that Seife was making plans to retire and had "no reason to lie" since he was leaving the agency and the most severe punishment he might have received for the lunches would have been separation from the agency. He maintained that the government was "looking to make a case" and "lacked decency" when it did not come forward earlier to confront Seife with evidence of his meals with industry. "The government has gone overboard to get the scalp of Marvin Seife," Fox contended. "Why make a federal case," Fox repeatedly asked, telling the jury that they should have reasonable doubt about what was going through Seife's mind at the time he submitted the sworn statement. Emphasizing that every single witness, whether for the prosecution or for the defense, testified to the honesty and integrity of Seife, Fox argued before the jury: "You should have reasonable doubt at such a case and you should be offended by it." Some of the most damaging testimony came from prosecution witnesses who testified under plea agreements, including K.C. Bae, former Par Senior VP Ashok Patel, and Jan Sturm, a former generics division Consumer Safety Officer who later worked at Quad as VP-regulatory affairs. Bae is scheduled to be sentenced on Dec. 13 for giving Chang$10,000. Patel was sentenced to a one-year suspended sentence and a $150,000 fine in January for paying $3,500 to Brancato and Chang. Sturm served 60 days of work release and paid a $5,000 fine for receiving an illegal payment of $20,000 from Vegesna. Documents filed in court by Seife's attorney reveal that the three prosecution witnesses are also involved in ongoing criminal investigations. Patel is cooperating in the U.S. Attorney's investigation of Par for defrauding FDA on certain ANDAs approved for marketing. According to the court filings, the The U.S. Attorney plans to seek charges against Bae for "interstate distribution of misbranded drugs and with causing drugs that he manufactured to be adulterated," as well as other possible charges. Citing the circumstances of his cooperation, Seife's lawyer characterized Bae as having the "credibility of a trained seal." The court filings show that Jan Sturm is also the subject of an undisclosed criminal investigation that has been referred to the U.S. Attorney for a decision on whether to prosecute. The ongoing investigations involving Bae and Patel were disclosed to the jury during the trial. However, the jury was not informed of the investigation involving Sturm since the witness had not yet been informed. Bae's testimony about the Dec. 11, 1987 lunch with Kaplan and Seife gave the prosecution the basis to speculate that Seife tried to conceal the truth about the lunch because he knew it had the appearance of a bribe. Bae testified that he thought he had a quid pro quo agreement with Kaplan to get on the "good side" of Seife. Bae said he offered to put up $150,000 to $200,000 to pay a congressional lobbyist for a reorganization plan of the generic approval process proposed by Kaplan that theoretically would have enhanced Seife's position at FDA. At the Dec. 11, 1987 lunch, Bae said the three of them talked about the plan. Bae noted he also brought up the subject of My-K's supplemental application for Sulmaprim (sulfamethoxazole/trimethoprim), which, according to Bae, was being held up by generic division reviewer Ronald Joyce. Bae testified that during the lunch Seife agreed to "look into it." Thirteen days after the lunch meeting, Sulmaprim was approved. Bae said that Seife called him to notify him of the approval. During the phone conversation, Bae said he told Seife that he planned to honor his commitment to the reorganization plan. He later paid$6,000 to the lobbying firm, Parry and Romani, to support Kaplan's reorganization plan. In Seife's testimony, which lasted a full day, the former generics division director said he had been aware for some time of Kaplan's plan to raise the Division of Generic Drugs to an office level and increase personnel and resources. However, Seife said that even then he thought the plan was "goofy," calling it a "pie-in-the-sky plan." Seife also acknowledged that he knew of Bae's intention to fund the lobbying effort. Under cross-examination, Seife admitted to becoming uncomfortable when Bae and Kaplan raised the subject of the Sulmaprim ANDA during the Dec. 11, 1987 lunch. Seife said he left the restaurant ten minutes after the subject was raised. "I thought the whole luncheon was inappropriate," Seife said. However, he admitted to allowing Bae to pick up the bill. In his defense, Seife said that in late 1989 he did not recall the lunch with Bae and Kaplan but that he had freely discussed with investigators the topics of that lunch. Seife said he told HHS Inspector General special agent Patricia Van Gilder, on Nov. 16, 1989, of Kaplan's reorganization plan and the lobbying effort as well as the problems that Bae was having in getting his supplement approved. Seife also said that he did not object when Van Gilder asked to see his 1987 desk calendar. Van Gilder testified at the trial that Seife's calendar showed that Kaplan had signed in around 11:30 a.m. on Dec. 11, 1987 to visit Seife and that the notation of "lunch" next to the name appeared to have been erased. Seife could not recall whether he had erased it. The prosecution asserted that Seife lied about having meals with industry because of a 1980 investigation in which Seife was admonished for having lunch with company reps three to four times a week ("The Pink Sheet" Oct. 29, p. 22). The government used testimony from Sturm to support that contention. Sturm testified that after he had joined Quad, former FDAer Charles Chang arranged a lunch for him with Seife in the spring of 1988. In his testimony, Sturm recalled that Seife asked to be picked up down the street from FDA's Parklawn building, instead of at the front door. Sturm speculated that Seife was fearful that someone might see them going to lunch together. During lunch, Sturm said Seife discussed the generic Under questioning, Seife provided his impression of the 1980 investigation. He admitted that he had lunch with industry "frequently" prior to 1980 but claimed that it was "part of the teaching process" for the small emerging generic industry. Seife said he "did everything to encourage these fellows to submit good applications." Maintaining that there were "no hard fast rules" about having meals with industry until 1980, Seife said the agency policy "was written by someone [then-Bureau of Drugs Director Richard Crout] who disliked me intensely. It was the Seife regulation." However, Seife said he agreed to cease accepting meals from industry in a letter written by his lawyer Fox to Crout in 1980. The 1980 investigation, Seife maintained, was a form of harassment. He suggested in his testimony that some officials at the agency were attempting to get back at him for his 1978 testimony before the House Energy & Commerce/Oversight Subcommittee that was critical of the agency. "There was a revenge a result of my being so outspoken," Seife told the court. Seife claimed he had had a similar experience following his May 1989 testimony before the same House subcommittee chaired by Rep. Dingell (D-Mich.). Nine days following testimony in closed session before the subcommittee, Seife noted, he was removed from his position as director of the division. In addition, his relationship with then-Commissioner Young deteriorated to the point that Seife said he was greeted by Young with snide remarks during the July 1989 Dingell hearing. The former generic division director has received considerable praise from Congress for his cooperation in the investigation of the most recent generic scandal. Three months before the former generics head was charged with perjury, Dingell staffer David Nelson credited Seife with providing the subcommittee "with the first roadmap of problems in the industry." In February of this year, Dingell and Ranking Republican Bliley (R-Va.) released a statement praising Seife as "among a small handful of FDA employees willing to cooperate fully with the subcommittee in its investigation." Although it was not his practice to accept meals from industry after 1986, Seife testified that he did make exceptions on occasion. Citing his 1986 award of merit and appointment to the senior executive service of the government, Seife said he was allowed to receive gifts of food, lodging, and entertainment of less than $250 from any one source during the calendar year. Seife explained that his statement that he had "made it a practice" after 1980 not to have meals with industry reflected his routine of eating at his desk "95% of the time." The U.S. Attorney also noted Seife's contacts with an investment analyst, John Curran. The two were frequent lunch partners. The former FDAer defended his lunches with Curran by citing their longstanding friendship. However, Willcox pointed out that Curran testified to recommending Bolar stock following a 1987 lunch with Seife during which Curran said he discussed with Seife the political pressure being brought to bear on FDA to approve Bolar's generic Dyazide. During other lunches with company reps, Willcox maintained that Seife discussed pending applications. Former Quantum Pharmics President Alan Silberman testified that he discussed the pending ANDA for cyclophosphamide with Seife over lunch at the 1988 National Association of Pharmaceutical Manufacturers annual meeting in Puerto Rico. According to other expense reports submitted to Quantum, Seife also discussed cyclophosphamide with Quantum exec Jin Shung Chang over lunch on another occasion. Seife's attorney Fox argued that the 14 meals Seife was alleged to have accepted from industry between 1986 and 1988, not including the Curran lunches, did not constitute "numerous" violations of agency policy, as maintained by the prosecution. However, the prosecution declared that any one of those meals contradicted Seife's statement that he never accepted meals from regulated industry. SEIFE's ROLE IN INVESTIGATION As head of FDA's Generic Drug Division, Marvin Seife was a very visible figure during the recent investigations. He received credit several times for helping with the investigation. House Oversight Subcommittee staffer David Nelson credited Seife with providing the subcommittee with "the first roadmap of problems in the [generic] industry...Up until Seife began to talk to us, we saw this as largely an FDA problem, not an industry problem." In a Feb. 28, 1990 statement, Subcommittee Chairman Dingell (D-Mich.) and Ranking Republican Bliley (R-Va.) praised Seife as "among a small handful of FDA employees willing to cooperate fully with the subcommittee in its investigations of the generic drug approval process." Dingell said that Seife's willingness to aid the investigation "contrasted sharply with those of other FDA officials, including his superiors in the Center for Drug Evaluation and Research and in the chief counsel's office." In addition, the legislators noted, Seife "risked both his job and reputation to respond to the subcommittee's questions in a forthcoming and helpful way, and he greatly assisted our investigation."



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