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HHS Notifies CEO of Forest Labs They Intend to Exclude Him From Doing Business With the US Federal Government

Posted Apr 26 2011 8:16pm

Now we have a cross road here, does this mean Forest Labs won’t be able to do business with the government?  It somewhat sounds that way so this could mean no Medicare, Medicaid and VA Business.  In order to get back in good graces, this would mean the company would have to dump the CEO.  image

The Defense Department and the Environmental Protection Agency have debarment powers as well and in reading this I learned something today about the “debarment powers”.  Celexa and Lexapro marketing was the big issue last year and Forest made a plea and is paying $313 Million in criminal charges and penalties over misconduct.  We have seen case after case to where everyone pays up and admits no wrong doing (but in this case it looks like they did) and business goes on as usual and this is not only the pharmaceutical business but lets bring in banks for another example.  It’s also worth noting the CEO is 83 years old, does he not want to retire?  Bill Weldon better keep his eyes open too if this spreads further into other investigations as we know J and J has their share.  BD 

A government attempt to oust a longtime drug-company chief executive over his company's marketing violations is raising alarms in that industry and beyond about a potential expansion of federal involvement in the business world. image

The Department of Health and Human Services this month notified Howard Solomon of Forest Laboratories Inc. that it intends to exclude him from doing business with the federal government. This, in turn, could prevent Forest from selling its drugs to Medicare, Medicaid and the Veterans Administration. If the government implements its ban, Forest would have to dump Mr. Solomon, now 83 years old, in order to protect its corporate revenue. No drug company, large or small, can afford to lose out on sales to the federal government, a major customer.

The "action against the CEO of Forest Labs is a game changer," said Richard Westling, a corporate defense attorney in Nashville who has represented executives in different industries against the government.

Mr. Solomon became chief executive in 1977 and built Forest from a maker of vitamin tablets into a global company with more than $4 billion in annual sales.

His son is writer Andrew Solomon, who won a National Book Award in 2001 for his book about struggling with depression. Inspired by his son, Howard Solomon pushed Forest into the antidepressant market and turned Celexa and Lexapro into successes. In the year ending March 2004, the two drugs accounted for about 82% of the company's sales.


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