SFO faces £10m legal bill on collapsed pharma investigation

SFO faces £10m legal bill on collapsed pharma investigationThe Serious Fraud Office (SFO) could face a £10m legal bill following the collapse of its £25m, six-year investigation into alleged price fixing by drug manufacturers.

The SFO had accused pharmaceutical companies Goldshield, Kent Pharmaceuticals, Generics (UK) and Ranbaxy, of conspiring to defraud the NHS through an alleged pharmaceutical cartel.

The SFO's original indictment only related to price-fixing, which alone is not an offence. When the SFO tried to amend the indictment to include conspiracy to defraud the Department of Health between 1996 and 1999 its application was refused (The Lawyer, 11 July).

Yesterday, the Court of Appeal took little more than an hour to refuse the SFO leave to appeal an earlier House of Lords decision on the case. Lawyers for the defendants now expect the SFO to be ordered to pay significant legal fees. Goldshield alone is believed to have racked up legal fees of more than £6m.

The SFO has already been asked to contribute to the costs of the House of Lords case that quashed its original claim against the pharmaceutical companies.

The government office has dedicated significant resources to the prosecution. It had to borrow 100 officers from the National Crime Squad for 30 dawn raids to launch the investigation. It seized six million documents and built it's own database to sift through them.

One lawyer close to the case said: "Richard Alderman's appointment [in March as SFO director] after the House of Lords case collapsed would have provided a perfect opportunity to draw a line under this claim, but they were determined to carry on."

Pannone head of regulatory investigations Anthony Barnfather, who acted for John Clark, a director of Kent Pharmaceuticals, added: "The stance of the SFO throughout this investigation has been one of overconfidence verging on misplaced arrogance."

In July, Alderman told The Lawyer the SFO wanted to adopt preventative measures as an alternative to bringing costly litigation.

"An example of where litigation may not be the right course of action is where two businesses merge," he said. "One finds out the other has been fraudulent and so those people are thrown out of the company and other steps to rectify the fraud are taken to the best of the company's abilities.

"In such a scenario the business wants to draw a line under it and start afresh, and I think the SFO should help in that instead of prosecuting needlessly."

The Civil Justice System’s Role Protects Consumers Federal Preemption Threatens This Role

Tuesday, October 21, 2008

The Civil Justice System’s Role Protects Consumers Federal Preemption Threatens This Role

The American Association of Justice (AAJ) released a series of documents that detail how helping negligent corporations escape accountability has been a top priority for the Bush Administration. The documents were obtained through repeated Freedom of Information Act requests by AAJ and reveal how the Bush Administration has silently ordered federal agencies to usurp state law and consumer protections.

The AAJ report titled, Get Out of Jail Free: A Historical Perspective of How the Bush Administration Helps Corporations Escape Accountability, tracks the origins of complete immunity preemption. Further, the report reveals how in 2005 carbon copy statements claiming that federal agency rules preempt state law began surfacing in the rule “preambles” issued by the federal government, and in some cases the final rules. To date, seven federal agencies have issued over 60 proposed and final rules with preemption language in the preamble and claimed the authority to provide immunity from state law.

The Wall Street Journal recently outlined how these new rules will weaken consumer protections and will affect everything from motorcycle brakes to pain medicine. The story also includes an acknowledgment from a former Administration official that skirting Congress and usurping tougher state consumer safety laws was a goal of this Administration. And we can expect even more activity from federal agencies in the waning months of the Bush Administration. In exposing this wide-ranging attempt by the Bush Administration to dismantle states’ rights, AAJ uncovers the cozy relationship between federal agencies and the industries they regulate and the dissension at the agencies that resulted from the move to curtail states’ authority.