WASHINGTON, Sept. 29 The government's investigation intoCephalon Inc.'s illegal marketing practices that culminated in today's$425,000,000 settlement and guilty plea by the pharmaceutical company began inJanuary 2003 with a Cephalon sales representative in Ohio.
The sales representative, Bruce Boise, refused to follow company-orderedsales strategies to convince doctors to prescribe Cephalon's Actiq, Gabitriland Provigil drugs for unapproved ("off-label') uses because he was worriedthe sales practices were illegal and the "off-label" uses were dangerous forpatients.
Boise was so concerned about Cephalon's off-label marketing that hecontacted the Food and Drug Administration (FDA) to inform them of what thecompany was doing and then agreed to wear a wire to a company sales conferenceto help the government gather evidence.
The decision to report Cephalon to the FDA cost Boise his job and futureemployment in the pharmaceutical industry. But his information helped endCephalon's illegal marketing practices that put patients at risk and led totoday's settlement.
Cephalon Inc. (Nasdaq: CEPH), a pharmaceutical company based in Frazer,Pennsylvania, will pay the federal government and numerous states a total of$375 million to settle four "qui tam" (whistleblower) lawsuits allegingMedicare and Medicaid fraud involving the sales and marketing of Actiq,Gabitril and Provigil between 2001 and 2006. At the same time, Cephalon hasagreed to plead guilty to a criminal charge involving off-label marketing ofthe drugs and will pay a $50 million fine.
"What makes this case unique is that it's the first time, in the absenceof substantial kickbacks, that the federal government has used the FalseClaims Act to go after a pharmaceutical company for marketing drugs for off-label indications for which there were no credible published scientificresearch supporting these drugs' safety or effectiveness," said Peter W.Chatfield, a Washington, DC, attorney whose firm, Phillips & Cohen LLP,represents Boise. "Not only were these uses marketed by Cephalon not approvedby the FDA, there was absolutely no literature published in any medicalcompendia that supported them."
The FDA approves drugs for specific uses, which are noted in the drugs'labeling. Doctors may prescribe those drugs for other "off-label" therapeuticuses, but the law prohibits drug companies from promoting drugs for usesbeyond those found to be safe and effective by the FDA.
While Medicare, Medicaid and other federally funded healthcare programsoften will pay for off-label use of drugs supported by credible medicalresearch and prescribed based on the medical judgment of physicians,Cephalon's marketing efforts pushed well beyond those constraints.
Cephalon's off-label sales strategies were very effective. Thegovernment's investigation found that more than 80 percent of the sales ofProvigil, Gabitril and Actiq were for off-label uses.
The FDA approved the use of Provigil to help keep awake patients withcertain disorders, such as sleep apnea or shift-work sleep disorder. To boostsales, Cephalon marketed Provigil for off-label uses including fatigueassociated with mental illnesses, such as schizophrenia, and children withattention deficit hyperactivity disorder, according to Boise's lawsuit.
Gabitril was approved for the treatment of partial seizures in epilepticpatients. Yet Cephalon was pushing doctors to prescribe it for anxiety andinsomnia, Boise's lawsuit said.
The most dangerous Cephalon drug when used for "off-label" uses is Actiq,an opioid that is approved only to treat cancer patients when their usual painmedication doesn't control "breakthrough" episodes of extreme pain. Thepotential side effects of Actiq include nausea, dizziness and respiratorydepression, which can be life-threatening.
Boise's lawsuit says that Cephalon decided to increase Actiq's sales bymarketing it for general pain treatment to internists and generalpractitioners - doctors who usually aren't as familiar as oncologists are withthe potential dangers associated with using a prescription narcotic such asActiq.
Boise was the first to report Cephalon's off-label marketing practices tothe federal government and played a key role in the investigation. Only afterhe was fired and found it impossible to secure new employment in the industrybecause he had been blackballed did he seek counsel to file a lawsuit underthe False Claims Act. The whistleblower law allows private citizens to suecompanies defrauding the government and receive a reward. But by the time hehired a lawyer to represent him, nearly two years had passed since he firstcontacted the FDA.
In the interim, two other whistleblowers filed qui tam lawsuits makingsimilar allegations nine months after Boise had provided extensive informationto the FDA and reported Cephalon to the FDA. After he learned about the FalseClaims Act, Boise contacted Phillips & Cohen, which filed his qui tam lawsuitin federal district court in Philadelphia, Pennsylvania, in September 2004 onbehalf of the federal government and a dozen states with similar false claimsstatutes. A fourth whistleblower filed a qui tam lawsuit one week later.
Today's settlement covers all four whistleblower lawsuits. Thewhistleblowers will receive a reward totaling $46 million for theirinformation and the work on the case they did with their attorneys on thefederal case and roughly an additional $11 million for the state cases.
"Bruce Boise sacrificed a lot to protect patients across this country,"attorney Chatfield said. "But he found Cephalon's practices to be sooutrageous and dangerous that he has no regrets about going to the FDA despitesuffering more personal hardship than any whistleblower I have everrepresented."
Chatfield praised the work of Assistant U.S. Attorney Marilyn S. May ofthe Eastern District of Pennsylvania and William C. Gambrell Jr. of SouthCarolina's Medicaid Fraud Control Unit, who coordinated the efforts of thestates to evaluate losses to the Medicaid program.
Phillips & Cohen is the largest and most successful law firm thatspecializes exclusively in representing whistleblowers nationwide in qui tamand tax fraud cases. Qui tam cases brought by the firm's attorneys havereturned more than $2 billion to the U.S. Treasury. For more information aboutPhillips & Cohen and whistleblower cases, see www.phillipsandcohen.com.
SOURCE Phillips & Cohen