Life Science Compliance Update

August 20, 2015

Amgen Pays $71 Million to States For Off-Label Allegations In Violation of Consumer Protection Laws


Earlier this week, Amgen Inc. agreed to pay $71 million to 48 states to settle allegations that it violated state consumer protection laws by promoting its anemia drug Aranesp and plaque psoriasis drug Enbrel off-label. Amgen pleaded guilty in 2012 to a federal criminal charge related to similar off-label allegations related to Aranesp, paying $762 million, then the “single largest criminal and civil False Claims Act settlement involving a biotechnology company in U.S. history,” stated DOJ. 

Aranesp is used to treat certain types of anemia by stimulating bone marrow to produce red blood cells.  Enbrel is used to treat a number of conditions, including certain types of plaque psoriasis. The Complaint and Consent Judgment filed this week alleges that Amgen violated state consumer protection laws by:

  • (1) promoting Aranesp for dosing frequencies longer than the FDA approved label without competent and reliable scientific evidence to substantiate the extended dosing frequencies; 
  • (2) promoting Aranesp for anemia caused by cancer without having FDA approval or competent and reliable scientific evidence to support it;
  • (3) promoting Enbrel for mild plaque psoriasis even though Enbrel is only approved by the FDA to treat chronic moderate to severe plaque psoriasis; and
  • (4) overstating the length of Enbrel’s efficacy in treating plaque psoriasis. By obtaining a compendium  listing (typically, a non-profit reference book listing a drug’s strengths, qualities and ingredients) for Aranesp for anemia of cancer, Amgen unlawfully facilitated health care coverage and reimbursement for the drug.

According to the Complaint, Aranesp’s main competitor is Procrit, a drug produced by Johnson & Johnson. Procrit has a shorter half-life and is dosed more frequently than Aranesp. To better compete against Procrit, the complaint alleges that Amgen promoted Aranesp "at extended dosing frequencies." 

The complaint (see New Jersey's for an example) also outlined the government's previous interactions with Amgen. It noted that the Food and Drug Administration sent a Warning Letter to Amgen in February 2005 advising that the company's direct-to-consumer television advertisement “Freedom” overstated the effectiveness of Enbrel and minimized the risks associated with the drug. In March 2008, the FDA also required that a black box warning be added to Enbrel’s labeling, which noted that potentially serious infections had been observed in patients treated with Enbrel. These infections included cases of bacterial sepsis and tuberculosis. FDA also required Amgen to expand its Black Box warning on a number of subsequent occasions. The complaint alleges that "despite the black box warnings, the 2005 FDA Warning Letter, and Enbrel’s limited approval for use in chronic moderate to severe plaque psoriasis, Amgen promoted Enbrel for off-label use in treating patients with mild plaque psoriasis from 2004 through 2011, and overstated Enbrel’s efficacy in the treatment of plaque psoriasis." 

In addition to the monetary terms of settlement, Amgen is subject to the following non-monetary terms, among others. Amgen:

  • Shall not make, or cause to be made, any written or oral claim that is false, misleading or deceptive in its promotion of Aranesp and Enbrel.
  • Shall not represent that Aranesp and Enbrel possess any sponsorship, approval, characteristic, ingredients, uses, benefits, quantities or qualities they do not have.
  • Is prohibited from using a pharmaceutical compendium listing or publication to promote Aranesp and Enbrel for off-label use to a health care professional.
  • Is prohibited from using a third-party to lobby a pharmaceutical compendium on Amgen’s behalf without notifying the compendium that the third party is acting at Amgen’s request.

View the state of New Jersey's complaint against Amgen here

View the consent here.

Many of the provisions in the Consent decree seek to curtail misleading statements, but it is worth noting that Amgen's truthful off-label promotion may also be impacted by the terms of the settlement. The recent court case involving Amarin held that the First Amendment protects such truthful promotion, even for yet-unapproved indications. It will. This consent agreement in effect may have contracted away some First Amendment rights, and it will be interesting to see how this affects future deals. A recent article by Sindhu Sundar from Law360 noted: "attorneys say the recent Amarin Pharma Inc. decision supporting wider commercial speech will change that dynamic by giving companies more leverage in future marketing disputes."


This relatively large state consumer protection action shows that a settlement with the federal government may not be the end of the line for a company looking to settle up for allegedly improper marketing practices. We last wrote about GlaxoSmithKline's $105 million dollar consumer protection settlement that added to its already large ($3 billion) total settlement amount. 

August 17, 2015

OIG Continues Scrutiny of Physician-Owned Distributors of Spinal Devices with New Report: Overlap Between Physician Owned Hospitals and PODs


Last week, the Department of Health and Human Services Office of Inspector General (OIG) followed up on its recent scrutiny into physician-owned distributorships (PODS) with a study entitled “Overlap Between Physician-Owned Hospitals and Physician-Owned Distributors.” In it, OIG reviewed 12 hospitals that had self-identified as physician-owned and reported having purchased spinal devices from PODs. The agency used publicly available information, including the Web sites for hospitals and PODs, as well as State business registration websites, and information from CMS's Provider Enrollment, Chain and Ownership System (PECOS) to attempt to determine whether a physician had an ownership interest in both a hospital and a POD that sold spinal devices to the hospital.

In their report (available here) OIG notes that they identified one physician with an ownership interest in both a hospital and a POD. However, OIG concluded that “[t]he limited information that is available to identify physicians who have concurrent ownership interests in PODs and hospitals raises concern about transparency among Medicare providers and the vendors that sell them implantable devices.” Transparency, according to OIG, is important to ensure that providers do not violate the Anti-Kickback Statute or the Stark Law, and also helps to ensure public safety. “One of the primary criticisms of PODs is that ownership may affect physicians’ clinical decisionmaking, such as influencing them to perform unnecessary surgeries or to choose a device in which they have a financial interest rather than another device that may be more appropriate for the patient,” OIG writes.

Open Payments

A noteworthy aspect of the report is the government’s continued articulation that Open Payments will be a useful enforcement tool. OIG writes that “there is limited transparency with regard to ownership information for PODs and, to a lesser extent, of hospitals. CMS’s implementation of the Physician Payments Sunshine Act (Sunshine Act) may improve the information available to identify the physician-owners of PODs.”

The Sunshine Act requires manufacturers and group purchasing organizations to report to CMS any ownership and investment interests that are held by physicians. CMS has published two sets of data so far, most recently 2014 transfers of value and ownership interests. “OIG will monitor CMS’s Sunshine Act database and determine how best to assess its impact on transparency within Medicare,” the agency concludes.

OIG also states that their report is being issued directly in final form because it contains no recommendations. If you have comments or questions about this report, please provide them within 60 days. Please refer to report number OEI-01-14-00270 in all correspondence.

Recent Scrutiny Into PODs

PODs, which are medical device distributors that are owned, at least in part, by physicians who use the devices, have attracted scrutiny from Congress and the HHS-OIG. A 2011 Congressional report entitled Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight stated that “[t]he very nature of PODs seem to create financial incentives for physician investors to use those devices that give them the greatest financial return and that, in the process, patient treatment decisions may be based on personal financial gain.” In 2013, the HHS-OIG issued a Special Fraud Alert specifically targeting physician-owned entities as well, stating that PODs “are inherently suspicious under the anti-kickback statute.”

In 2014, the Department of Justice sued Reliance Medical Systems over an alleged kickback scheme involving PODs, whereby physician investors would be paid based on the number of Reliance spinal implants they used. On May 22, one of the neurosurgeons named in the complaint, Dr. Aria Sabit, admitted that the financial incentives provided by the PODs "caused him to compromise his medical judgment and cause serious bodily injury to his patients by performing medically unnecessary spine surgeries on some of the patients in whom he implanted [the] spinal implant devices," states DOJ


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