ICN Pharmaceuticals Inc. will pay $1 million
Paul Clinton
Troubled drug maker ICN Pharmaceuticals Inc. is taking its
medicine.
The Costa Mesa company on Monday agreed to pay $1 million and
implement new disclosure procedures as part of a settlement with the
Securities and Exchange Commission, Wall Street’s top regulator.
ICN’s former Chief Executive Milan Panic, a former Yugoslavian
leader, has also agreed to pay an additional $500,000, regulators
said.
“The company has agreed to implement significant procedures,” said
Merri Jo Gillette, the SEC attorney who handled the case. “To their
credit, they wanted to put this behind them.”
With the settlement, ICN executives said they are closing the book
on a four-year ordeal stemming from charges first filed against the
company by the SEC in 1999.
Earlier this month, the company announced a new slate of officers
and a restructuring plan.
“ICN now has virtually a completely new board and management team
in place that remains committed to providing accurate information in
the most timely manner to the investment community,” company Chairman
and Chief Executive Robert O’Leary said in a statement.
Regulators charged the company in 1999 with violating securities
laws in late 1994 and 1995. Former executives misrepresented the
regulatory status of hot-selling hepatitis drug Ribavirin, Gillette
said.
In December, the company pleaded guilty to criminal fraud charges
and agreed to pay $5.6 million. ICN had failed to disclose a letter
sent to the company in December of 1994 from the Food and Drug
Administration.
In the letter, the FDA informed the company it had rejected
Ribavirin. However, on Dec. 9, the drug regulator approved Ribavirin
as a treatment method for hepatitis C, as long as it was used in
combination with an interferon drug.
The SEC charged that ICN failed to disclose the FDA’s rejection of
Ribavirin for three months.
As part of the civil settlement announced Monday, the company
agreed to set up an independent committee to write all FDA-related
press releases and have the federal agency review all those releases
prior to publication, Gillette said.
ICN also agreed to appoint an attorney to conduct yearly reviews
of the firm’s disclosure procedures.
Panic, who founded the company in 1960, left his post in June. He
will remain on the board at least until his term expires in May.
Gillette praised the company’s “change of corporate culture.”
ICN has a record of run-ins with the SEC.
In 1991, ICN settled an SEC complaint that it failed to disclose
information about the status of its application to the FDA for
approval of Ribavirin to treat AIDS.
Also, in 1977, the SEC issued an injunction against ICN for
failing to disclose financial information in a quarterly report.
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