ICN to Pay $600,000 in Virazole Case : Settlement: The company does not admit or deny wrongdoing over promoting drug as a treatment for AIDS virus.
ICN Pharmaceuticals Inc. said Friday that it has agreed to pay $600,000 to settle civil charges that it violated federal laws when it promoted the drug Virazole as a treatment for the AIDS virus.
The Costa Mesa pharmaceutical company did not admit or deny any wrongdoing in a consent decree with the U.S. Justice Department. But it said it agreed to settle the 3-year-old allegations to avoid expensive, lengthy litigation.
An anti-viral drug that is approved for treatment of a common infant respiratory virus, Virazole was never approved as an anti-AIDS drug in the United States. Food and Drug Administration officials disputed ICN’s claims in 1987 and 1988 that the drug delayed the development of AIDS in some patients.
Ireland is the only country that has approved Virazole--ICN’s trade name for the drug ribavirin--for AIDS patients.
In 1988, at the behest of the FDA, a Los Angeles grand jury began investigating allegations that ICN illegally offered to sell the drug for treatment of AIDS patients without government approval. No charges resulted, however.
The Securities and Exchange Commission also investigated allegations that ICN and its research subsidiary, Viratek Inc., had spread false information about the efficacy and safety of ribavirin.
In March, 1990, the company announced that it was abandoning efforts to gain approval for Virazole as an AIDS treatment and was discussing terms of a possible settlement with the federal government regarding the allegations of spreading false information.
The rise and fall of Virazole as a potential AIDS treatment was expensive for both the company and investors. Early speculation that ICN could gain approval for Virazole sent the company’s stock price skyrocketing from $10 a share to a peak of $34 in August, 1986.
The price fell to $3.625 a share after ICN announced that it had abandoned efforts to gain FDA approval for the drug in this country. ICN stock closed Friday at $5.50 a share, up 25 cents.
ICN reported an $82-million loss for fiscal 1989, largely due to a writedown related to its ribavirin operations.
ICN Chairman Milan Panic said in a statement that the settlement will “bring this matter to a conclusion and once and for all put allegations of criminal wrongdoing to rest.”
ICN agreed to abide by all FDA laws and regulations in the future, pay a $400,000 penalty and reimburse the FDA $200,000 in administrative costs.
