Life Science Compliance Update

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September 08, 2017

Celgene Settles Whistleblower Suit for $280 Million

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Late July 2017, Celgene Corp., a manufacturer of pharmaceuticals, agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the United States Food and Drug Administration (FDA).

The settlement resolves allegations brought in a “whistleblower” lawsuit that Celgene promoted two cancer drugs – Thalomid and Revlimid – for uses that were not approved by the FDA and not covered by federal health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program. The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit.

Ms. Brown alleged that her supervisors at Celgene instructed her and other sales employees to promote to doctors various off-label uses of the drugs, and that she was rewarded for it in her compensation. The lawsuit alleged the marketing activities caused doctors to write prescriptions for the drugs that government health programs such as Medicare shouldn’t have paid for, but did.

According to Reuben A. Guttman, an attorney representing the whistleblower, cancer drugs are typically more difficult to pursue in off-label promotion cases because oncologists tend to prescribe drugs for unapproved uses in an effort to combat a deadly and often times mysterious disease. “The company got the idea that it could be fast and loose with what it was saying about its drug because it was selling to cancer patients who might be in need.” Guttman continued, noting, “At the end of the day, what this is about is that even when you’re on life’s edge,” a company “can’t break the law by off-label marketing a drug.”

Pursuant to the settlement, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.

Though the DOJ's marketing prosecutions lately have focused on kickbacks, the Celgene case is a off-label marketing lawsuit. Brown alleged that Celgene used sales meetings to train its reps to market Thalomid and Revlimid for cancers it wasn't approved to treat. Celgene reps allegedly touted studies that, according to Brown, failed to provide adequate scientific evidence to support those off-label uses. Brown also claimed that the initial label on Thalomid didn't include warnings related to its use in cancer, which she alleges made the off-label prescriptions "tantamount to ongoing human experimentation." One case is unlikely to show a tide turning within the DOJ’s prosecutorial discretion.

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