Forest Labs chief to challenge potential action to exclude him from Federal health care programs; completes Clinical Data buy

US drugmaker Forest Laboratories (NYSE: FRX) says that Howard Solomon, its chairman, chief executive and president, will challenge a potential action by the Office of the Inspector General, Department of Health and Human Services (HHS-OIG), to exclude him from participation in federal health care programs, of which he was notified this week. Mr. Solomon was notified yesterday of the potential action in a letter from HHS-OIG.

As previously announced, the firm’s wholly-owned subsidiary Forest Pharmaceuticals entered into a global settlement in September 2010, as part of which the company, among other things, pleaded guilty in November 2010 to two strict liability, no-intent misdemeanor violations of the federal Food, Drug and Cosmetic Act, relating to conduct that occurred almost a decade ago involving the distribution and marketing of Levothroid and Celexa. The company agreed to a total payment in excess of $313 million to resolve all criminal and civil claims.

The potential action emanates from matters that were settled by Forest in 2010 with no finding of knowledge or wrongdoing by Mr Solomon. The only basis given in the letter notifying Mr Solomon of the potential action is that he is “associated with” Forest. The letter gives Mr Solomon 30 days to respond and say why he should not be excluded. Should HHS-OIG determine after that that Mr Solomon be excluded, unless the effectiveness of such exclusion is enjoined by a court, he would be required to step down from his present executive positions. Mr Solomon plans to commence immediate litigation to prevent such exclusion from taking effect if HHS-OIG determines to proceed.