It’s fair to say that the Pittsburgh Post-Gazette and two of its reporters, Patricia Sabatini and Len Boselovic, have been an aggravation, to put it mildly, to generic drug manufacturer Mylan Inc. for some time. But it looks like the Post-Gazette‘s July 26 story written by Sabatini and Boselovic was Mylan’s tipping point.
In that story, entitled "Mylan workers overrode drug quality controls," the Post-Gazette reported that, according to a confidential internal memo obtained by the paper, "the company discovered that workers were routinely overriding computer-generated warnings about potential problems with the medications they were producing."
The article also described Mylan’s investigation into the incidents, which at least two former FDA investigators who were interviewed for the article suggested was inadequate for the scope of the alleged problem. In addition to reviewing the internal memorandum, Sabatini and Boselovic interviewed several Mylan employees who remained anonymous, which apparently had caused Mylan CEO Robert Coury to send out a memorandum in June reminding Mylan employees of the company’s policy that prohibited unauthorized employees from talking to the media.
But the Post-Gazette‘s story, which also had a sidebar entitled "Mylan’s ‘red screen’ timeline," apparently put enough pressure on Mylan to issue a press release on July 26 — the same date as the Post-Gazette‘s article — in which Mylan criticized the article and stated that its quality control processes were working.
Then, on July 28, Mylan issued another press release, in which it reported that representatives of the FDA visited its plant on July 27 and have "determined that the baseless accusations in the article were unfounded." (The press release did not explain how a regulatory agency can determine, based on a site visit that lasted no more than one day, that allegations made in an article based on weeks of reporting, were "baseless" and "unfounded.") But that wasn’t the end of Mylan’s reaction.
Last Wednesday, Mylan filed a lawsuit against the Post-Gazette, Sabatini, Boselovic, and several John Does in the Circuit Court of Monongalia County, West Virginia. Mylan Pharmaceuticals, Inc v. PG Publishing Co., Civil Action No. 09-C-592 (August 19, 2009). Here is the complaint, in which Mylan alleged that:
The Post-Gazette’s Article [on July 26], and a series of articles that followed, are sensational and misleading articles based on improperly obtained and misconstrued confidential, proprietary and/or privileged internal documents. The articles mischaracterized facts relating to an internal Mylan procedure, creating the false appearance of significant quality and regulatory issues at Mylan’s Morgantown, W. Va., plant when no such issues existed.
But another paragraph suggests the real reason for the lawsuit:
The sensationalized misuse of the Documents caused harm to Mylan and its shareholders, evidenced by substantial market volatility, a decrease in its stock price, and the resulting decrease in market capitalization, all of which occurred on the second largest trading day in Mylan’s history.
Mylan has asserted claims for detinue (wrongful detention of Mylan’s property such as the documents), misappropriation of trade secrets, conversion ("Defendants intentionally dispossessed or intermeddled with Mylan’s property interest in the Documents and trade secrets by obtaining them and using the confidential, proprietary and/or privileged information therein."), and trespass to chattels ("This use of the Documents and trade secrets by Defendants caused harm to Mylan through the dispossession and dissemination of the information contained therein and the loss of Mylan’s property interest in the confidential, proprietary and/or privileged Documents and trade secrets."), and seeks compensatory and punitive damages.
Jim Edwards at BNET Pharma Blog wrote this post last week, which suggests that the the real motivation behind the lawsuit may have been the drop in Mylan’s stock price (mentioned in the complaint) and and its relationship to Mylan CEO Coury’s compensation (not mentioned in the complaint). Also as noted by Edwards, there may have been an element of payback in Mylan’s lawsuit, as the Post-Gazette‘s reporting about Mylan COO Heather Bresch’s fictitious MBA caused quite a stir in Morgantown last year. But before you start worrying too much about the effect of the MBA scandal on Bresch’s career, take a look at Mylan’s July 29 press release, in which it announced that she has been promoted to president of the company.
Here’s another post by Edwards from August 17 in which he questioned whether Coury had libeled Sabatini and Boselovic by describing their reporting as "baseless" and "biased," even though the FDA’s report of its investigation was consistent with what they reported.
My own impression, based, admittedly, on limited facts and reporting, is that the lawsuit is Mylan’s attempt to get the Post-Gazette generally and Sabatini and Boselovic specifically to curtail their coverage of Mylan, which Myland may have achieved, at least temporarily. I don’t know what the Post-Gazette‘s policy is, but I’d be surprised if Sabatini and Boselovic are allowed to write about Mylan — regardless of the issue — during the pendency of the lawsuit.
Plus, the lawsuit enables Mylan to focus on the Post-Gazette and its reporters while the issues that prompted the story in the first place become secondary.