7th Circuit Affirms Sentencing in Pharmakon Conspiracy Case

The 7th Circuit Court of Appeals affirmed on Thursday the 33-month sentence of Paul Elmer, who was found guilty on 10 counts of conspiracy to defraud the Food and Drug Administration (FDA), introducing adulterated drugs into interstate commerce, and adulterating drugs being held for sale in interstate commerce, after Elmer attempted to appeal several of the Southern District Court of Indiana’s rulings.

The defendant owned and operated Pharmakon Pharmaceuticals, among other companies, developing drugs that “Elmer knew were dangerous” and that put infant lives in danger, the panel said.

Pharmakon, along with a third party, conducted testing on its drugs to measure whether they were under-potent, having too little of the active ingredient, or over-potent, having too much of the active ingredient, the complaint said. There were 134 times that both under- and over-potent drugs were still distributed to consumers, the court explained. One instance, in March 2014, resulted in “severe respiratory distress” in 13 infants after receiving overly potent Midazolam drug. In February 2016, the same hospital received more over-potent drugs, morphine sulphate, from Pharmakon — which contained 25 times the amount of morphine that the label stated. An infant who received the over-potent morphine “immediately went into respiratory arrest” and nearly died, if not for three doses of Narcan, the court explained.

After the 2014 incident, the FDA began investigating Pharmakon, but director of compliance Caprice Bearden and Elmer both lied to FDA officials, saying their test results did not show any under- or over-potent drugs in those batches, the court explained. The FDA investigated Pharmakon again after the 2016 incident. The opinion said investigators were met with deception from Elmer, along with Michelle Beland, a pharmacist at a Pharmakon facility, attempting to hide the results showing the under- and over-potent drugs. The pharmacist at the facility being investigated eventually provided the documentation to show the out-of-specification test results, the court explained, after which Elmer still did not recall the drugs in question.

Elmer went to trial in June 2016 and was found guilty of the aforementioned charges and then sentenced to 33 months in prison, which he appealed. He argued that the government, “as part of proving the adulteration charges … should not have been allowed to introduce evidence of 73 separate instances of out-of-specification test results” and “that the district court should never have allowed the jury to learn about the personal relationship he had with Pharmakon pharmacist Michelle Beland,” the court explained. He also argued his sentence “was substantively unreasonable given his health issues and family obligations.”

The court disagreed with Elmer’s arguments. Regarding the test result evidence, the court said, “In no way were these out-of-specification test results prior bad act evidence: they constituted direct evidence of the conspiracy.”

Regarding Elmer’s second challenge, the court found that “it was necessary to show why Beland was willing to follow Elmer’s instructions to lie to the authorities,” including evidence of personal communications between Elmer and Beland that included “sexual talk” and “dirty jokes,” the court explained. The court said it limited Beland’s testimony to omit specific references to the communications and that the references in her testimony were “very general, lacking in prejudicial details.”

The court maintained that a 33-month sentence “was in no way substantively unreasonable,” and that “if anything, Elmer’s sentence strikes us as meaningfully lower than the district court could have imposed given the extreme risks, including to infant patients, posed by his offense conduct,” the court explained.