By Nate Raymond
A federal judge on Tuesday sentenced Aegerion Pharmaceuticals Inc for improperly marketing a cholesterol drug and ordered that some of the $40.1 million it agreed to pay to resolve a U.S. investigation go to the company's victims.
U.S. District Judge William Young in Boston had in November rejected an initial plea deal between the U.S. Justice Department and the Novelion Therapeutics Inc unit, saying it restricted his ability to impose a sentence.
The judge sentenced Aegerion under a new deal that gave him discretion to determine how much it should pay. Young ordered it to pay $7.2 million, an amount it had from the start agreed to pay and that is part of the $40.1 million.
But Young said he disagreed with treating that sum as a fine that would go to the government as the deal called for and said it would instead be made available to 91 patients who may have been harmed by Aegerion's conduct.
"I think you ought to pay more attention to the actual people who were harmed here," Young told a prosecutor.
Young also said he wanted to receive reports from an independent auditor during Aegerion's three years on probation.
Prosecutors said after Aegerion in 2012 received U.S. Food and Drug Administration approval to market Juxtapid for treating high cholesterol in people with a rare genetic disease, the company promoted the expensive drug for patients who lacked the condition.
Numerous patients suffered side effects including liver toxicity and gastrointestinal distress, prosecutors said.
Cambridge, Massachusetts-based Aegerion 2016 merged with QLT Inc and became a subsidiary of the newly named Canada-based Novelion.
In court on Tuesday, Aegerion pleaded guilty to two misdemeanor counts that it misbranded Juxtapid in violation of the Federal Food, Drug and Cosmetic Act.
"It never should have occurred, and we strive to ensure it never occurs again," said Jeffrey Hackman, Novelion's chief operating officer.
Lawyers for Aegerion had urged Young to not force it to pay more than $7.2 million, saying its financial condition had deteriorated and that its "ability to survive may turn on the outcome of this sentencing."
In total, Aegerion agreed to pay $36 million to resolve criminal and civil claims by the Justice Department.
It also entered into a related deferred prosecution agreement and agreed to pay $4.1 million to resolve a U.S. Securities and Exchange Commission case.
(Reporting by Nate Raymond in Boston; editing by Grant McCool and Tom Brown)