Life Science Compliance Update

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September 03, 2010

Allergan Botox Settlement and Corporate Integrity Agreement

This week, the United States Department of Justice (DOJ) announced that it has reached a resolution regarding the previously reported Government investigation into Allergan's past U.S. sales and marketing practices relating to certain therapeutic uses of BOTOX(R) (onabotulinumtoxinA), which covered a period that commenced in January of 2000. The company had been cooperating with the Government in a multi-year investigation in Atlanta, Georgia.

According to a press release posted on the DOJ’s website, Allergan Inc. has agreed to plead guilty and pay $600 million to resolve its criminal and civil liability arising from the company’s unlawful promotion of its biological product, Botox® Therapeutic, for uses not approved as safe and effective by the Food and Drug Administration (FDA). The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million.

The civil settlement resolves three lawsuits filed in federal court in the Northern District of Georgia under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.  The whistleblowers – Dr. Amy Lang, Charles Rushin, Cher Beilfuss, Kathleen O'Conner-Masse, and Edward Hallivis – will receive $37.8 million from the federal share of the settlement amount. 


Under the Food, Drug and Cosmetic Act (FDCA), a company must specify the intended uses of a product in its new drug application to the FDA.  Before a drug is approved the FDA must determine that the drug is safe and effective for the use proposed by the company, and once approved, the drug may not be marketed or promoted for off-label uses. Although doctors are permitted to prescribe any approved drug for off-label uses, it is illegal for drug makers to promote medications for any purpose not specifically approved by the FDA.

The DOJ’s press release explained that in 1989 the FDA approved Botox®, a prescription biological product containing botulinum toxin type A, a purified neurotoxin, to treat strabismus (crossed eyes) and blepharospasm (involuntary eyelid muscle contraction).  In 2000 and 2004, approval was given to treat cervical dystonia (involuntary neck muscle contraction) and primary axillary hyperhidrosis (excessive underarm sweating), respectively.  In 2010, approval was given to treat adult upper-limb spasticity.

Consequently, Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, and Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, announced the filing of a criminal information against Allergan for promoting Botox® for headache, pain, spasticity and juvenile cerebral palsy – none of which were approved by the FDA.  According to the criminal information, Allergan made it a top corporate priority to maximize sales of Botox® for such off-label uses.


Allergan agreed to plead guilty to a single misdemeanor "misbranding" charge covering the period 2000 through 2005 and pay to the Government $375 million. This misbranding charge is known as a strict liability offense, and does not involve false or deceptive conduct.

As part of its plea, Allergan has agreed that between 2000 through 2005, its marketing of BOTOX(R) resulted in intended uses for the therapeutic treatment of headache, pain, spasticity and juvenile cerebral palsy. These uses were off-label during the relevant time frame and thus the labeling for BOTOX(R) did not bear directions for these intended uses, resulting in the product being misbranded.

In addition, Allergan has agreed to pay $225 million to resolve civil claims asserted by DOJ under the civil False Claims Act. However, in a pressrelease from the company, Allergan denies liability associated with these civil allegations and does not believe there is merit to them factually or legally.

What was interesting about this settlement is that Allergan was required by the Government to dismiss Allergan's First Amendment lawsuit pending in Washington, D.C., in which Allergan sought a ruling that it could proactively share truthful scientific and medical information with the medical community to assist physicians in evaluating the risks and benefits if they choose to use BOTOX(R) off-label to treat certain forms of spasticity.

Allergen Corporate Integrity Agreement

The Corporate Integrity Agreement Allergan has entered into with the Office of Inspector General of the U.S. Department of Health and Human Services, will require the company to maintain its current compliance program and undertake a series of compliance-related obligations, including additional monitoring, maintenance of specific written standards, auditing, training, education, reporting and disclosure, for five years. The CIA also provides for an independent third-party review organization to assess and report on Allergan's compliance program. In addition, the CIA provides that:

-   Sales representatives refer all requests for information about off-label uses of Allergan’s Government Reimbursed Products to its Medical Affairs Department

-   Materials distributed by Medical Affairs in response to requests for information about off-label use must be consistent with applicable FDA requirements;

-   Allergen creates a database to keep track of inquiries for the medical information about off-label uses, such as

1) Date of Inquiry;

2) Form of Inquiry (e.g., fax, phone, etc.);

3) Name of the requesting health care professional (HCP) or health care

    institution (HCI)

4) Nature and topic of request (including exact language of the Inquiry if made

    in writing);

5) nature/form of the response from Allergan (including a record of the  

    materials provided to the HCP or HCI in response to the request); and

6) The name of the Allergan representative who called on or interacted with

    the HCP or HCI, if known;


The Policies and Procedures require that all promotional and written materials and information intended to be disseminated outside Allergan by appropriate qualified personnel:


1)    Are given to applicable review committees to review all promotional materials prior to the distribution or use of such materials; and

2)    Deviations from the standard review committee practices and protocols (including timetables for the review of materials) must be documented and referred for appropriate follow-up;


Consultant or Other Fee-for-Service Arrangements


Under the CIA, these arrangements with HCPs or HCIs (i.e. speaker programs, speaker training programs, presentations, etc.) and all events and expenses relating to such engagements or arrangements must be designed and used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements. The Policies and Procedures include requirements about the:


-    Content and circumstances of such arrangements and events; and

-    Programs to educate sales representatives, including but not limited to presentations by HCPs at sales meetings and experience-based learning activities, if any.

-    Sponsorship or funding of charitable contributions;

-    Funding of grants (including educational grants) to HCPs and HCIs.


Third Party Educational Activity


The Policies and Procedures require that:


1)    Allergan disclose its financial support of the Third Party Educational Activity;

2)    Allergen disclose any financial relationships with faculty, speakers, or organizers at such Activity;

3)    As a condition of funding, the third party must agree to disclose Allergan’s financial support of the Third Party Educational Activity and any financial relationships that Allergan might have with faculty, speakers, or organizers at such Activity;

4)    Any faculty, speakers, or organizers at the Third Party Educational Activity disclose any financial relationship with the applicable Allergan entity;

5)    The Third Party Educational Activity have an educational focus;

6)    The content, organization, and operation of the Third Party Educational Activity be independent of Allergan’s control;

7)    Allergan or the Allergan Affiliate support only Third Party Educational Activity that is non-promotional in tone/nature; and

8)    Allergan’s or any Allergan Affiliate’s support of a Third Party Educational Activity must be contingent on the provider’s commitment to provide information at the Third Party Educational Activity that is fair, balanced, accurate and not misleading;


In following these policies, Allergen must ensure that review of all promotional and written materials and information intended to be disseminated outside Allergan by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) is done in a manner designed to ensure that legal, regulatory, and medical concerns are properly addressed during Allergan’s review and approval process and are elevated when appropriate.


Monitoring Program


The CIA also requires that Allergan develop and implement a monitoring program, known as the Non-Promotional Monitoring Program, for the following types of activities:


1) Consultant arrangements;

2) Research-related activities;

3) Publication activities; and

4) Medical education grants.


With respect to consultant arrangements, research-related activities, and publication activities, the CIA requires that all Consultants, Researchers and Authors, enter written agreements describing:


-   The scope of work to be performed;

-   The fees to be paid; and

-   Compliance obligations for the Consultants.


In addition, for each of these activities, the CIA requires that researchers, consultants, and authors be paid based on a fair-market value analysis conducted by Allergan, and that this fair-market value analysis be incorporated into guidelines that are used in the review, approval, and funding of these activities.


Regarding the monitoring of each of these activities, the CIA establishes that the Monitoring Program must conduct live monitoring for each Reporting Period of:


-   At least 30 Consultant arrangements with HCPs;

-   At least 10 advisory board programs;

-   Monitoring of 20 other professional services agreements with HCPs;

-   At least 20 Researcher arrangements with HCPs or HCIs;

-   At least 25 U.S.-sponsored Publication Activities;


With regards to medical education grants, Allergan represents that it has established a Medical Education Department within its Medical Affairs Department as the exclusive mechanism through which requestors may seek or be awarded grants for independent medical education activities. Allergan represents that:


-    Its sales and marketing departments have no involvement in, or influence over, the review and approval of medical education grants.

-    Grant requests must be submitted through an on-line process; and

-    Requests are processed in accordance with standardized criteria developed by the Medical Education Department.


The CIA requires that Allergan continue the medical education grant process described above (or an equivalent process) throughout the term of the CIA, and the company must notify the OIG in writing at least 60 days prior to the implementation of any new system subsequent to the Effective Date.


Additionally, the CIA requires Allergan to establish a Grants Monitoring Program for each Reporting Period to monitor at least 30 medical education grants. The Grants

Monitoring Program will select grants for review both on a risk-based targeting approach

and on a sampling approach. Allergan compliance personnel conducting the Grants

Monitoring Program will review:


-    Proposal documents (including grant requests);

-    Approval documents, contracts, payments, and materials relating to the Medical Education Department’s review of the requests; and

-    Documents and materials relating to the grants and any events or activities funded through the grants


These materials will be reviewed in order to assess whether the activities are conducted in a manner consistent with Allergan’s Policies and Procedures. Results from the Grant Monitoring Programs, including the identification of potential violations of policies, will be compiled and reported to the Corporate Compliance Department for review and follow-up as appropriate.


Physician Payments


The CIA also contains specific provisions with respect to payments from Allergen to physicians. The payments are broken into two phases: “Phase I Payments” are defined to include:


-    All payments or transfers of value (whether in cash or in kind) made by Allergan to physicians and/or to Related Entities related to:

-    Meals, speaker programs, or advisory boards conducted by Sales, Marketing, or Medical Affairs.


Phase II Payments, include all “payments or transfers of value” as defined by the Patient Protection and Affordable Care Act. The reporting will go as follows:

-    April 30, 2011, Allergan will begin posting in a prominent position on its website Phase I Reporting during the last two quarters of 2010 and the aggregate value of such Phase I Payments.

-    August 31, 2011, Allergan will also post on its website a listing of updated information about all Phase I Payments provided during the first two quarters of 2011.

-    November 30, 2011, Allergan will begin posting Phase II Payments during the third quarter of 2011 and the aggregate value of such Phase II Payments.

-    After the November 30, 2011 posting, 60 days after the end of each subsequent calendar quarter, Allergan must also post on its website a listing of updated information about all Phase II payments provided during the preceding quarter(s) in each calendar year.

-    Beginning on February 29, 2012, and 60 days after the end of each subsequent calendar year, Allergan must post on its website a report of the cumulative value of the Phase II Payments provided to all U.S.-based physicians and Related Entities directly or indirectly from Allergan during the prior applicable calendar year.


All of the above reporting must be easily accessible and a readily searchable listing of all U.S.-based physicians and Related Entities who or which received Phase I or II Payments directly or indirectly from Allergan. In addition:

-    Each listing must include a complete list of all individual physicians and Related Entities to whom or to which Allergan directly or indirectly made Payments in the preceding quarter or year (as applicable).

-    Each listing will be arranged alphabetically according to the physicians’ last name or the name of the Related Entity.

-    The Payment amounts in the lists will be reported in $10,000 increments (e.g., $0 - $10,000; $10,001- $20,000; etc.)

For each physician, the applicable listing will include the following information:

i)   Physician’s full name;

ii)  Name of any Related Entities (if applicable);

iii) City and state that the physician or Related Entity has provided to Allergan for contact purposes; and

iv)  The aggregate value of the payment(s) in the preceding six-month period or year (as applicable). If payments for multiple physicians have been made to one Related Entity, the aggregate value of all payments to the Related Entity will be the reported amount.

On a bi-annual basis, Allergan must post on its company website the following information with respect to both medical education grants and charitable contributions to U.S.-based HCIs:


1.    The recipient organization’s name:

2.    A brief description of the program for which the grant or charitable contribution was requested; and

3.    The amount of the grant or charitable contribution.


Allergan must continue to post (and provide updates to) the above-described information about medical education grants and charitable contributions to U.S.-based HCIs throughout the term of this CIA. The company must also notify the OIG in writing at least 60 days prior to any change in the substance of its policies regarding the funding of medical education grants and charitable contributions to U.S.-based HCIs or posting of the above-referenced information relating to such funding.




Allergan represents that it expects all Authors of biomedical manuscripts to fully comply with the International Committee of Medical Journal Editors (ICMJE) criteria regarding authorship and disclosure of their relationship with Allergan and to disclose any potential conflicts of interest, including any financial or personal relationships that might be perceived to bias their work.


Impact of Settlement and CIA

Douglas S. Ingram, Allergan's Executive Vice President, noted that "This settlement is in the best interest of our stockholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with Government enforcement action in these matters, and permits us to focus our time and resources on productively developing new treatments for patients and the medical community."

While the criminal resolution is subject to approval by the federal court in Northern District of Georgia, and the civil settlement is contingent upon such approval, Allergan is disappointed that the court was not afforded an opportunity to hear and rule on the important First Amendment issues, as Allergan believes that physicians, patients, manufacturers, payers, and ultimately the quality of evidence-based medicine itself would have benefited from a ruling clarifying the law.

The company also asserted in its press release that “Allergan is committed to conducting its business consistent with high ethical standards and in compliance with all applicable laws.” To meet its compliance goals, Allergan has a robust and regularly reviewed and updated compliance program. The company also noted that it has further enhanced its compliance program by developing additional comprehensive policies and procedures, supported by significant technology investments, including its state-of-the-art Business Execution Automated Compliance Navigator (BEACON) compliance system.

1st Amendment Suit

As we discussed the government negotiated that Allergan drop their first amendment suit against the Food and Drug Administration.  

First as a citizen of the United States it is disappointing that the government would use their prosecutorial powers to force individuals to withdraw challenging the constitutionality of a law.  This is something one would expect from a third world country not the world’s greatest constitutional democracy. 

If the FDA does have the right within the constitution to regulate the dissemination of scientifically proven information then they should have no fear in defending that right.   With the threat of prosecutions constantly standing over the heads of company directors, it is unlikely that a larger pharmaceutical company would take on the federal government and small companies would never have access to the resources to challenge the law.   I am hopeful that some time in the near future someone will take the FDA on in this matter and when they do, it is very likely the FDA will lose on constitutional grounds.   Otherwise why would the FDA go to all the trouble to get it withdrawn?

Key Documents:

Criminal Settlement 9/1/10

Civil Settlement 9/1/10

Corporate Integrity Agreement 9/1/10

Form 810K – Securities and Exchange Commission

Press Release DOJ

Press Release Allergan

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