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Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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September 24, 2013

When Does a Biotech Press Release Constitute Fraud?

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Posted by Derek

What can you say in a press release about a clinical trial? "Darn near anything, apparently" will be the response from many people who've been seeing them over the years. But really, what can you say, legally? Is there some point where you've clearly crossed the line into fraud, or are all these things just varying interpretations of scientific data?

That uncomfortable question has been working its way through the court system in the person of W. Scott Harkonen, former CEO of Intermune. This case is back in the news thanks to a long article in the Washington Post (pointed out to me by a reader of this blog in the comments section here). Here's the background: Intermune was selling Actimmune (interferon gamma-1b) for two rare-disease indications, but wanted to break into the much larger market for idiopathic pulmonary fibrosis (IPF), for which there were basically no therapies at all.

Unfortunately, the trial didn't go the way that everyone had hoped. Here's the Washington Post's take on it, complete with quotation marks around the phrase "statistical significance":

In all, 330 patients were randomly assigned to get either interferon gamma-1b or placebo injections. Disease progression or death occurred in 46 percent of those on the drug and 52 percent of those on placebo. That was not a significant difference, statistically speaking. When only survival was considered, however, the drug looked better: 10 percent of people getting the drug died, compared with 17 percent of those on placebo. However, that difference wasn’t “statistically significant,” either.

Specifically, the so-called P value — a mathematical measure of the strength of the evidence that there’s a true difference between a treatment and placebo — was 0.08. It needs to be 0.05 or smaller to be considered “statistically significant” under the conventions of medical research.

Technically, the study was a bust, although the results leaned toward a benefit from interferon gamma-1b. Was there a group of patients in which the results tipped? Harkonen asked the statisticians to look.

It turns out that people with mild to moderate cases of the disease (as measured by lung function) had a dramatic difference in survival. Only 5 percent of those taking the drug died, compared with 16 percent of those on placebo. The P value was 0.004 — highly significant.

But there was a problem. This mild-to-moderate subgroup wasn’t one the researchers said they would analyze when they set up the study. Subdividing patients after the fact and looking for statistically significant results is a controversial practice. In its most extreme form, it’s scorned as “data dredging.” The term suggests that if you drag a net through a bunch of numbers enough times, you’ll come up with something significant sooner or later.

Yes indeed. In fact, the term suggests that because that's absolutely true, and it can be proven mathematically. If you take a large enough pile of clinical data, with enough variables, and break it down into enough subgroups, the odds get better and better than something will look significant simply by chance. You can say when you've done enough to have a 50% chance of that happening, or a 90% chance, or whatever cutoff you like. It isn't voodoo, although statistics are poorly understood enough to make it sound so if you've never had to think about the issues.

The situation Intermune found itself in is a tough one, but it's not uncommon. This is why clinical trial design is so critical. You want to run one that has the best chance of showing a clinically relevant effect, but you're not going to be able to cover every sort of patient and subgroup, either, because time and money get out of control very quickly at this point and can absolutely sink your whole effort. The "might have worked" result is a hard place to be.

Unfortunately, Harkonen does not seem to have reacted well to it. He personally wrote a press release with these headlines: “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF” and “Reduces Mortality by 70% in Patients with Mild to Moderate Disease.” If you read the rest of the text, it did mention that the study missed its primary endpoints, but there was no mention that the mild-to-moderate group was a post hoc analysis. He ended up charged with wire fraud, and was convicted. That conviction has been appealed (here's the appeals court ruling against him), and now there's talk of going to the Supreme Court, although I don't know if his legal team has asked for certiorari yet or not.

So, what's the line between protected free speech and fraud? The newspaper article mentions the recent United States v. Alvarez decision, which ended up overturning the "Stolen Valor Act" making it illegal to claim (falsely) to have military decorations. The Alvarez in question was an idiot who claimed, in his job on a water district board, to have won the Medal of Honor. Sure thing. But although I Am Not a Lawyer, this seems like a different case to me. One of the big points of contention in the Alvarez case was whether or not it was a defamation, and if so, who was being defamed, and how they were damaged. The Supreme Court was split up all over the place in their own opinions, with even justices that agreed with the majority disagreeing over what they were agreeing about.

This case seems more straightforward, at least to me. I think it's more a case of commercial speech. There's probably case law by the shelfload on this, and I may be totally wrong, but I would regard all press releases by publicly traded companies as commercial speech, simply due to their effects on the stock prices involved. If the case makes it to the Supreme Court, I'd expect it to be so that the justices can try to untangle that issue (as in this previous case, which the Court dodged due to a procedural matter).

Oh, one other thing, which doesn't necessarily bear on this case but is worth mentioning as an illustration of its issues. Intermune actually did go forward with another trial of Actimmune against mild-to-moderate IPF patients. And sure enough, it didn't work.

Comments (29) + TrackBacks (0) | Category: Business and Markets


1. Electrochemist on September 24, 2013 12:44 PM writes...

Without commenting one way or the other on this specific case, I will say that if false and/or misleading statements are going to be punished in this way relative to investigational drugs, then the same level of scrutiny *must* be applied to nutraceuticals, dietary supplements, herbal remedies, etc. The claims that the hawkers of these "snake oils" are allowed to make in the mainstream media is a far more egregious situation than anything that might be said about clinical- phase molecules (in terms of number of people misled, and the consequences thereof).

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2. Ibidem on September 24, 2013 1:00 PM writes...

You didn't close the italics tag for "US vs Alvarez."

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3. annonie on September 24, 2013 1:11 PM writes...

And politicians !

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4. Anonymous on September 24, 2013 1:30 PM writes...


Just checking! :-)

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5. Hap on September 24, 2013 1:49 PM writes...

People who sell stuff aren't required to tell you what they don't know about it, although supplementeers seem to violate even that minimal standard on a regular basis. You just need to not claim things that you have no evidence for, and not misrepresent what you do have evidence about - sort of like PR, I think. It'd probably be better if the FTC just enforced its own rules on supplement advertising; to do more, I assume that Congress would have to agree to change their supplement rules (good luck, I think).

On the other hand, if you elide the status of your analysis from one of your press releases (and you know it's critical for understanding, or ought to) then it seems like you've committed fraud - you have actively misrepresented the status in question, probably for financial gain (corporate, perhaps personal) at the expense of your shareholders.

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6. Electrochemist on September 24, 2013 1:52 PM writes...

@ 35 Hap ... "You just need to not claim things that you have no evidence for"

Precisely my point.

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7. Electrochemist on September 24, 2013 1:52 PM writes...

@ 5 Hap ... "You just need to not claim things that you have no evidence for"

Precisely my point.

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8. Another Derek on September 24, 2013 1:58 PM writes...

I agree wholeheartedly with what you're saying, but the Dietary Supplement Health and Education Act of 1994 (DSHEA) pretty much allows manufacturers of snake oil to say whatever they like about it provided that they do not make explicit health claims. So, to pick an example, saw palmetto can be sold to "promote prostate health" but cannot be sold to "treat BPH" (though the vendors would no doubt like aging males to believe that the first implies the second). And note the "quack Miranda warning" in tiny print at the bottom of many of the ads (and I'm not referring to the saw palmetto one here, since I don't have one in front of me, just in general): "These statements have not been evaluated by the FDA.These products are not intended to diagnose, treat, cure or prevent any disease."

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9. Anonymous on September 24, 2013 2:04 PM writes...

@8: Then what about food supplements that say:

"To promote a healthy cancer-free body"?

Where do you draw the line?

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10. Anonymous on September 24, 2013 2:21 PM writes...

One has to be extremely careful when interpreting and communicating statistics...

Did you know that 99% of people exposed to taxol have cancer, compared with just 1% of the general population?

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11. me on September 24, 2013 2:21 PM writes...

You can correct for the expansion of probability of getting a significant result, if you know how many new subgroups you will be breaking things down into, and the people doing the breaking haven't seen the data.

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12. Anonymous on September 24, 2013 2:27 PM writes...

@11: Very interesting, and while I'm sure you are right, I guess that would not be acceptable to the FDA once the results have been unblinded.

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13. LeeH on September 24, 2013 3:01 PM writes...

The fact that the original study only achieved a difference in death rate of about 10% (7 out of 52) at the p

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14. Mad Dog on September 24, 2013 3:13 PM writes...

The title of this post was a question.
"When Does a Biotech Press Release Constitute Fraud?"

One answer is when the press release contatins the word Sirtuis.

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15. microtherion on September 24, 2013 3:14 PM writes...

One would think that a CEO named Harkonen would at least name his company “InterDUNE”…

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16. Ben on September 24, 2013 7:28 PM writes...

> One would think that a CEO named Harkonen would at least name his company “InterDUNE”…

Thank you. I'm glad at least one other person saw that.

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17. McChemist on September 24, 2013 7:40 PM writes...

> One would think that a CEO named Harkonen would at least name his company “InterDUNE”…

He who controls the interferon gamma-1b controls the universe!

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18. Pennpenn on September 24, 2013 7:43 PM writes...

@ #15, #16

I saw that too. Honestly, I'd be suspicious of anyone with that kind of name, and not all that shocked to find out that they were being deceitful...

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19. Anonymous on September 25, 2013 2:19 AM writes...

Nice Dune puns guys!

My reading is that this may encourage off-label prescribing. Therefore fraudulent? You know, why didn't they do sub-group analysis on people born on Thursdays? Why not people who take ketchup on their hot dogs but not mustard? If you look hard enough you'll find a correlation somewhere!

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20. paolo d. on September 25, 2013 2:26 AM writes...

In Italy a manufacturer of fluorine-containing chewing gum has been heavily fined because of the TV ads saying, basically, that this chewing gum is as effective as toothbrush and paste in promoting dental hygiene and care.
I know it's a small step against "snake oil" vendors, but I hope it's just the beginning....

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21. Anonymous on September 25, 2013 5:17 AM writes...

The funny thing is, while they eventually did the trial in the sub-population, it failed, which demonstrates the dangers of post-hoc analysis.

And yet, this is exactly the same mistake that Lilly are making with their mega trial in early to mid-stage AD patients, having failed their earlier trials.

Why are people so clueless about statistics? Just wait until Big Data finds all these amazing correlations, which people then invest billions into, only to find they are chasing nothing but random noise!

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22. öh on September 25, 2013 5:29 AM writes...

Härkönen is a Finnish surname. It was apparently changed to Harkonen since Anglophones couldn't spell it. (The pronunciation ends up about right if the stress on placed correctly on the first syllable, HAR-keh-nen, and all vowels are short.) It's a typical pattern, some word + nen, and in this case it's "härkä", "bull".

The Dune Harkonnen is a genuine misspelling of Härkönen.

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23. emjeff on September 25, 2013 8:00 AM writes...

If we outlaw lying, we will be able to arrest and convict every politician from the dawn of time. So, I am in favor of it...;^)

Well, not really. If this company was publically traded, there are already rules against this, and this is probably where it should have been handled.

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24. newnickname on September 25, 2013 8:20 AM writes...

From the WAPO article: " ... Some people, however, view [the decision] as a sleeping monster, a threat to free speech in science. ''If you applied this rule to scientists, a sizable proportion of them might be in jail today, ...'' "

From wikipedia on wire fraud: "Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, ..." has committed wire fraud.

So it appears to me that wire fraud is not limited to stock markets, private capital markets or commerce but COULD apply to scientists hyping their claims in order to get grant money.

In general, I'm in favor of that, BIG time!! ... But I also had to quote only snippets of text in order to make this point and I might have (unintentionally) left out something important. I know that Federal prisons have free TV, golf, and other accoutrements. I hope they have one with a fully equipped chem lab (including NMR, MS, etc.).

More simplistically: I think Harkonen stepped over the line and did misrepresent the results and, because of his conflicts of interests, did so with an intent to enrich himself and his company. Guilty. 6 months home confinement? He's getting off easy.

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25. Bruce Grant on September 25, 2013 8:56 AM writes...

Press releases are indeed commercial speech, and press releases from companies under FDA's purview are regarded as labeling and fully subject to their regulatory jurisdiction. The only reason biopharma and device companies are allowed to issue pre-approval press releases at all is that FDA grants them a safe harbor in which to comply with SEC regulations that publicly traded companies disclose any information that could have a "material impact" on their share price. Even then, most biopharma companies regard this as applying only for the minimum time necessary to meet disclosure requirements and promptly withdraw releases about products in development from their websites, etc., after a few days or weeks. And in any event, fraudulent statements in a press release expose the company to civil and potentially criminal enforcement by both FDA and SEC.

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26. rikki on September 25, 2013 9:45 AM writes...

Interesting read. It appears no sector is immune to foul tactics to achieve gains.

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27. Ethical former biotech employee on September 25, 2013 1:54 PM writes...

Let me think:

Fluff the results, emphasize the fluff, small-size the negative and keep my job, salary, bonus, and possibly enjoy a bonanza from my options.

Or, tell the bare-boned truth and rejoice in 'looking for a new challenge and opportunity'.

A tough one...

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28. Anonymous BMS Researcher on September 25, 2013 9:51 PM writes...

Loved the Dune references, maybe the guy will end up having plenty of time to read in a prison where the library includes Dune books.

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29. Anonymous BMS Researcher on September 25, 2013 9:54 PM writes...

Speaking of felons and books, does anybody know where I can find Andy Bodnar's book online? I don't have a PACER account, and other URLs mentioned in news articles about the book don't work.

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