FDA insider made over $1M on Fanapt, Viibryd announcements

In the behavioral health field, there's often a lot of anticipation surrounding a new drug’s FDA approval. During the summer, we found out about an FDA chemist who had taken a particular interest, using what he'd learned at his day job to make a few very well-timed investments. 

A federal court has now sentenced former FDA employee Chen Yi Liang to five years in prison for using his access to the agency's drug approval process for insider trading that resulted in almost $3.8 million in profits.

According to a story on Bloomberg News, Liang bought and sold stock in over 25 companies based on inside information accessed during his employment with the FDA’s drug evaluation unit. Interestingly enough, some of those companies' products are now being prescribed in the mental health field.

Typically trading in “smaller, developmental” drug companies, Liang is said to have made over $1 million on Vanda Pharmaceuticals, whose stock rose sevenfold just a day after the FDA approved its schizophrenia drug Fanapt in 2009. When Clinical Data’s new antidepressant Viibryd was approved last year, he made about $380,000.

On the surface, this story certainly appears to be an isolated incident. But many in this field probably take for granted that everyone’s intentions are the same, and that everyone involved simply wants what’s best for the end consumer. Unfortunately, that's not always the case and stories like this provide an unwelcome, but probably necessary, reminder.