A federal appeals court upheld HHS' decision to exclude three former Purdue Pharma executives from participating in federal healthcare programs such as Medicare and Medicaid.

Michael Friedman, Paul Goldenheim and Howard Udell, executives of what was then called Purdue Frederick, pleaded guilty in 2007 for failing to prevent the company's fraudulent marketing of the painkiller OxyContin.

In its opinion (PDF), the U.S. Court of Appeals for the District of Columbia Circuit Court ruled that the executives can be excluded from federal healthcare programs for their misdemeanor misbranding convictions.

"Surely the government constitutionally may refuse to deal further with senior corporate officers who could have but failed to prevent a fraud against the government on their watch," the court said.

However, the court said HHS' decision to exclude the executives for 12 years was "arbitrary and capricious with respect to the length of their exclusion."

The court directed the decision back to HHS for further consideration consistent with the court's opinion. In their appeal, the executives said the HHS had not provided a "reasoned explanation" for the length of their exclusion from participating in federal healthcare programs.