By Nate Raymond
BOSTON, Jan 30 (Reuters) - Aegerion Pharmaceuticals Inc is set to be sentenced on Tuesday for improperly marketing a cholesterol drug by a judge who rejected an initial plea deal and asked whether the drugmaker should be allowed to "collapse in disgrace."
U.S. District Judge William Young of Boston said in November that the original plea deal essentially restricted him to impose only the sentence agreed to by the U.S. Justice Department and Aegerion, a unit of Novelion Therapeutics Inc.
Aegerion's agreement was part of a deal to pay $40.1 million to resolve U.S. investigations of its drug Juxtapid. The company is now scheduled to plead guilty under a new deal that gives Young discretion on what penalties to impose.
Young said the earlier plea deal reflected the "shocking disparity between the treatment of corporations and individuals in our criminal justice system." He noted people typically go before judges with wide discretion to impose a sentence.
"What is left unexplained is why the government does not simply let Aegerion collapse in disgrace," Young wrote. "Surely Aegerion is not too big to fail."
Prosecutors said after Aegerion in 2012 received U.S. Food and Drug Administration approval to market Juxtapid for treating high cholesterol in people with a rare genetic disease, the company promoted the expensive drug for patients who lacked the condition.
Cambridge, Massachusetts-based Aegerion 2016 merged with QLT Inc and became a subsidiary of the newly named Vancouver, Canada-based Novelion.
In court papers, lawyers for Aegerion urged Young to impose a penalty of no more than a $7.2 million, which would be part of the $40.1 million.
Aegerion's financial condition has deteriorated and the case's uncertainty has blocked Novelion from the capital markets, the lawyers said. Last week, Novelion announced cost and workforce reductions that would cut expenses by $18 million.
"Aegerion's ability to survive may turn on the outcome of this sentencing," the company's lawyers wrote in a court filing.
Beyond pleading guilty, Aegerion agreed to pay $36 million to resolve criminal and civil claims by the Justice Department and enter into a deferred prosecution agreement.
It also agreed to pay $4.1 million to resolve a related U.S. Securities and Exchange Commission probe.
The case is U.S. v. Aegerion Pharmaceuticals Inc, U.S. District Court, District of Massachusetts, No. 17-cr-10288. (Reporting by Nate Raymond in Boston; editing by Grant McCool)