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Cyprus Chief of Finance Quits Post

April 2, 2013 by Leave a Comment

President Nicos Anastasiades accepted the decision by Mr. Sarris to step down, and the government quickly appointed Harris Georgiades, the deputy finance minister, as his replacement.

On the heels of Cyprus’s 10 billion euro, or $13 billion, bailout announced last week, a political blame game has broken open in the halls of power. Mr. Sarris has faced strong criticism for his handling of the crisis and had been under pressure from some factions in the Cypriot Parliament to step down.

He is also one of several people now facing an investigation by Cypriot officials over his role in the country’s banking crisis. Before taking the helm as finance minister in the government that came to power in February, Mr. Sarris was chairman of the board of Laiki Bank, which effectively collapsed last week. Laiki is being merged into the Bank of Cyprus in a deal under which depositors will lose up to 60 percent of their savings in excess of 100,000 euros.

Under his watch, a stint of eight months through August 2012 in which he tried to salvage Laiki, the bank suffered steep losses, mostly on a mountain of soured loans to Greek and Cypriot businesses and individuals. Cypriot banks also took a hit from their heavy holdings of Greek government bonds, which incurred big losses in the international bailout of Greece.

On Tuesday, some of the curbs Cyprus imposed on removing money from banks were softened. The restrictions had particularly hurt businesses that were not permitted to make large payments on debts they owed in the past two weeks.

The Finance Ministry lifted the ceiling on transactions between accounts and other banks to 25,000 euros from 5,000 euros. Other restrictions remain in place, including 300 euro daily withdrawal limits.

Mr. Anastasiades on Tuesday appointed a three-judge panel to look into how and why Cyprus edged close to a financial disaster that threatened to make it the first country to exit the euro. In a speech, he said the crisis arose from inept actions and omissions by people in charge of the banking sector and the economy.

Mr. Sarris had been at the front lines of the bailout negotiations, which led to one abortive deal more than two weeks ago in Brussels, followed by the final agreement early last week.

The most contentious decision in the first deal, which the Parliament rejected, would have imposed a 6.75 percent tax on bank deposits of less than 100,000 euros. Before it was abandoned, the plan was roundly criticized by economists in Europe and elsewhere as threatening the integrity of the deposit insurance system throughout the 17-country euro zone.

It was agreed to by Mr. Anastasiades in consultation with Mr. Sarris, who presented the deal to the Cypriot public in a televised news conference from Brussels on March 16.

After the Cypriot Parliament roundly rejected that plan, Mr. Sarris flew to Moscow to seek alternative sources of funding for Cyprus and its teetering banks. Those talks went nowhere.

“Mr. Sarris’s credibility was at near zero both nationally and with foreign lenders after he supported the first failed plan to tax depositors and then returned empty-handed from Moscow,” said Mujtaba Rahman, a senior analyst at the Eurasia Group.

The main provisions of the bailout deal will remain in place, including the breakup of Laiki Bank and the overhaul of the Bank of Cyprus.

But the Cypriot Parliament must still vote on a memorandum of understanding with the so-called troika of international organizations — the European Central Bank, the European Commission and the International Monetary Fund — that agreed to the bailout.

That memorandum, still being drafted, will outline the budget cuts and other conditions Cyprus will have to meet to receive its allotments of money. A parliamentary vote is expected in coming weeks. The governments of Germany and Finland, under their national rules on bailout loans, are also expected to seek the approval of their Parliaments.

The memorandum will probably be the subject of heated debate in Nicosia. Many lawmakers, already unhappy with the tough capital controls that have been slapped on bank accounts for the better part of a month, are dismayed by what they see as harsh terms that will tip Cyprus’s already enfeebled economy over the edge.

But Mr. Sarris’s resignation should “help the Cypriot government win approval for the bailout program in the Cypriot Parliament,” said Mr. Rahman, the analyst.

Michael Olympios, chairman of the Cyprus Investor Association, is among the many critics of the bailout deal because it wiped out the shareholders of Bank of Cyprus and will impose losses of up to 60 percent on depositors with more than 100,000 euros in their accounts.

“The troika is pushing us from recession to depression,” Mr. Olympios said, adding that the country may yet need to leave the euro zone. “It doesn’t matter if Mr. Sarris leaves and someone new comes in. If you don’t change the policies that are being imposed on us, then forget it.”

Article source: http://www.nytimes.com/2013/04/03/business/global/cypriot-finance-minister-resigns.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Ruling in Off-Label Marketing Case Is a Win for Drug Makers

December 4, 2012 by Leave a Comment

In a case that could have broad ramifications for the pharmaceutical industry, a federal appeals court on Monday threw out the conviction of a sales representative who sold a drug for uses not approved by the Food and Drug Administration. The judges said that the ban on so-called off-label marketing violated the representative’s freedom of speech.

The 2-to-1 decision by a three-judge panel of the Court of Appeals for the Second Circuit in Manhattan addresses a long-running and costly issue for the industry, which has paid billions of dollars in penalties to the federal government in recent years after being accused of marketing blockbuster drugs for off-label uses.

In July, for example, the British drug maker GlaxoSmithKline agreed to pay $3 billion in fines, in part for promoting antidepressants and other drugs for unapproved uses; a month later, Johnson Johnson announced that its pharmaceutical unit had reached a $181 million consumer fraud settlement with 36 states and the District of Columbia over its marketing of Risperdal, an antipsychotic drug.

“Most if not all of these cases have been based on a central premise: that it is unlawful for a company and one of its employees to be promoting a drug or a medical device off-label,” said John R. Fleder, a director at the law firm Hyman, Phelps McNamara who represented the F.D.A. while working at the Justice Department. “And this decision hits at the heart of the government’s theory.”

The ruling, in United States v. Caronia, involved the conviction of Alfred Caronia, a former sales representative for Orphan Medical, which was later acquired by Jazz Pharmaceutical. Mr. Caronia was selling Xyrem, a drug approved for excessive daytime sleepiness, known as narcolepsy. He was accused of promoting it to doctors as a treatment for insomnia, fibromyalgia and other conditions. He became the target of a federal investigation in 2005 and was caught on an audiotape discussing the unapproved uses of the drug with a doctor who was a government informant. He was convicted by a jury in 2008.

Mr. Caronia appealed the conviction, arguing that his right to free speech under the First Amendment was being illegally restricted. The appellate court decision applies only to the Second Circuit, which comprises New York, Connecticut and Vermont, but some lawyers said that the government was likely to appeal and that the case could find its way to the Supreme Court.

Under the Food, Drug and Cosmetic Act, which gives the F.D.A. the authority to regulate drugs, selling a “misbranded drug,” or one that is intended to be used for purposes not listed in the label, is illegal. Doctors, on the other hand, are free to prescribe a drug for any use. The agency has argued that off-label promotion of drugs is evidence that a sales representative or company intended to sell misbranded drugs.

In its decision, the court said this view violated the First Amendment and cited as precedent a 2011 Supreme Court decision, Sorrell vs. IMS Health. In that case, the high court, citing freedom of speech, overturned a Vermont law restricting pharmaceutical companies from using prescription data for marketing purposes.

“The government clearly prosecuted Caronia for his words — for his speech,” the majority wrote, concluding later “the government cannot prosecute pharmaceutical manufacturers and their representatives under the F.D.C.A. for speech promoting the lawful, off-label use of an F.D.A.-approved drug.”

The lone dissenting judge, Judge Debra Ann Livingston, vigorously disagreed, arguing that by throwing out Mr. Caronia’s conviction “the majority calls into question the very foundations of our century-old system of drug regulation.” She argued that if drug companies “were allowed to promote F.D.A.-approved drugs for nonapproved uses, they would have little incentive to seek F.D.A. approval for those uses.”

Gerald Masoudi, a former chief counsel of the F.D.A., said the ruling made a distinction between truthful discussion of off-label uses of drugs, many of which are considered legitimate by the medical community, and those that are misleading or false. He noted that “anyone on the planet” could discuss off-label uses of drugs, except for pharmaceutical companies.

“It’s very significant,” he said, “because it’s going to make F.D.A., in its promotion cases, focus on the kinds of speech that are more likely to harm consumers, such as false or misleading marketing versus something that is not approved.”

In a statement, the trade group for the pharmaceutical industry, Pharmaceutical Research and Manufacturers of America, said it was pleased with the ruling.

“PhRMA believes that truthful and nonmisleading communication between biopharmaceutical companies and health care professionals is good for patients, because it facilitates the exchange of up-to-date and scientifically accurate information about new treatments,” the statement said.

A spokeswoman for the F.D.A. said the agency did not comment on active litigation.

Lawyers said the government would most likely ask for a rehearing before the circuit court’s full panel of judges and after that, it could be taken up by the Supreme Court.

Because pharmaceutical companies market their drugs nationally and the ruling applies only within the Second Circuit, the ruling is not likely to lead drug makers to change their marketing policies. Rather, some said, the F.D.A. will be unlikely to pursue convictions in similar cases until the legal issues are resolved.

Article source: http://www.nytimes.com/2012/12/04/business/ruling-backs-drug-industry-on-off-label-marketing.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Court Weighs Protections for Lawyers Hired by Cities

January 18, 2012 by Leave a Comment

WASHINGTON — The Supreme Court on Tuesday considered whether private lawyers hired by municipalities to conduct investigations are entitled to protections against lawsuits available to government lawyers.

In the process, the justices expressed varying views about the state of the legal marketplace and the obligations of lawyers to offer independent advice, even if it exposed them to lawsuits.

Justice Sonia Sotomayor suggested, for instance, that no special protections were needed because “there is a whole slew of unemployed lawyers who would be happy to take on any government service they can.”

Chief Justice John G. Roberts Jr. at one point said that lawyers may not need special protection because they were required to give their best advice for any client. “Lawyers are not supposed to be cowed by the exigencies of the situation,” he said.

Later, though, Chief Justice Roberts expressed concern that an outside lawyer working for the government should “do what he thinks is the right thing in this situation,” adding: “We don’t want him to be worried about the fact that he might be sued.”

The case, Filarsky v. Delia, No. 10-1018, arose from an investigation of Nicholas B. Delia, a firefighter in Rialto, Calif., who had been suspected of improperly taking sick days. The city filmed Mr. Delia buying rolls of fiberglass insulation at a home improvement store while he was on medical leave, questioned him about the purchases and required him to retrieve the insulation from his home.

A three-judge panel of the United States Court of Appeals for the Ninth Circuit, in San Francisco, determined unanimously that various city officials and the private lawyer, Steve A. Filarsky, had violated Mr. Delia’s rights under the Fourth Amendment, which prohibits unreasonable searches. But the panel dismissed the suit against the officials, saying they were protected by qualified immunity.

That doctrine shields state officials from liability for civil rights violations so long as their conduct did not violate “clearly established” law.

The question before the justices was whether the suit against Mr. Filarsky should also have been dismissed on qualified-immunity grounds. A majority of the justices seemed inclined to answer yes.

The main hurdle was a 1997 decision of the court, Richardson v. McKnight, which ruled that people employed by private prisons were not entitled to qualified immunity while those who worked for prisons run by the government were.

Nicole A. Saharsky, a lawyer for the federal government who argued in support of Mr. Filarsky, said the Richardson decision involved “a fairly unique case in which the private prison was so removed from the day-to-day workings of government officials.”

Justice Anthony M. Kennedy, who had dissented in Richardson, said he did not see the difference. “It’s just hard to imagine anything more imbued with state action than imprisoning someone,” he said.

Patricia A. Millett, a lawyer for Mr. Filarsky, said that lawyers must be protected from even subconscious pressures to hedge their advice and that local governments may not be able to retain good lawyers if those lawyers fear lawsuits.

Michael A. McGill, a lawyer for Mr. Delia, said it had long been the law in the Ninth Circuit that private lawyers working for the government were not entitled to qualified immunity.

Justice Scalia, the author of the dissent in Richardson, responded that “there’s a lot of bad, cowardly legal advice being given in the Ninth Circuit,” adding: “I don’t really know that, but you don’t know the opposite, either, do you?”

“I don’t,” Mr. McGill said.

Article source: http://feeds.nytimes.com/click.phdo?i=927fda31b644594ca86ce9e79859aeb0

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Court Rules Against S.E.C. on Proxy Materials

July 22, 2011 by Leave a Comment

WASHINGTON — A federal appeals court on Friday delivered a sharp rebuke to the Securities and Exchange Commission by throwing out a recently approved regulation that would have required companies to include in their proxy materials information about shareholder-nominated candidates for election as directors.

The ruling, by the United States Court of Appeals for the District of Columbia Circuit, is the third time in six years that the court has thrown out a new S.E.C. rule because the agency failed to adequately assess its economic effects.

The S.E.C. approved the regulation, which has long been sought by pension funds and other institutional investor groups and fiercely opposed by business lobbyists, by a 3-2 vote last year. The rule was scheduled to become effective in November, but the agency stayed that pending the outcome of the court challenge.

That challenge, filed by the Chamber of Commerce and the Business Roundtable, was argued before the appeals court in April.

The rule would have allowed groups that owned at least 3 percent of the voting power of a company’s stock to nominate board candidates and have them included in the company’s proxy materials, which are mailed to shareholders at the company’s expense.

Currently, outside groups that are mounting a proxy contest to elect candidates to a board must pay for their own distribution of materials.

A three-judge panel rebuked the S.E.C. for its failure to satisfy the provisions of the Administrative Procedure Act, which requires cost-benefit studies to justify a new government regulation.

The court ruled that the S.E.C. “acted arbitrarily and capriciously” in failing to adequately consider the rule’s effect on “efficiency, competition and capital formation.”

“Here the commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters,” the court said, in a unanimous decision written by Judge Douglas H. Ginsburg.

Kevin J. Callahan, an S.E.C. spokesman, said the agency was “reviewing the decision and considering our options.”

The S.E.C. could seek a rehearing before the panel or the entire appeals court or could appeal the case, No. 10-1305, directly to the Supreme Court. It also could simply abandon the initiative or restart the rulemaking process with a new proposal, including an economic analysis and comments from the public.

A Chamber of Commerce official called the ruling “a big win for America’s job creators and investors.”

“We applaud the court’s decision to prevent special-interest politics from being injected into the boardroom,” Tom Donohue, president and chief executive of the United States Chamber of Commerce, said in a statement. “Companies and directors need to continue to focus on the important work of creating jobs and reviving our economy.  Today’s decision also sends a strong message that regulators need to meet their statutory requirement to clearly prove that the benefits of regulation outweigh the costs.”

Article source: http://feeds.nytimes.com/click.phdo?i=6ca460d14e3e0234382873f40f619788

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