Forest agrees to guilty plea for violating FDA laws and pay over $300 million in penalties

Forest Pharmaceuticals, a unit of Forest Laboratories (NYSE: FRX), has entered into a plea agreement in which the company accepted responsibility for criminal actions including distribution of an unapproved new drug, distribution of a misbranded drug and obstruction of a Food and Drug Administration inspection.

To resolve these charges and a related civil suit, Forest has agreed to pay more than $300 million, including $164 million in criminal penalties. This plea agreement is the culmination of a multi-year investigation conducted by the FDA’s Office of Criminal Investigations in cooperation with its law enforcement partners and the US Attorney’s Office for the District of Massachusetts.

Charges against Forest are primarily for its marketing of Levothroid (levothyroxine sodium tablets, USP), an unapproved drug used for the treatment of hypothyroidism. A 1997 Federal Register notice announced that these products are considered “new drugs” within the meaning of the Federal Food Drug and Cosmetic Act (FDCA) and that manufacturers which wished to continue marketing them must obtain approved applications from the FDA by August 2000. Because levothyroxine was considered a medically necessary product, the FDA permitted a gradual phase-out with all distribution of unapproved levothyroxine sodium drug products to cease no later than August 2003.