Full article reprinted from "The Pink Sheet Daily"- September 30, 2008
Find out why Cephalon will plead guilty to a misdemeanor violation and pay $425 million to resolve criminal charges brought by the U.S. Department of Justice and a separate civil suit alleging the company marketed three of its drugs off-label from January 2001 through at least 2006.
Full article reprinted from "The Pink Sheet Daily"- September 30, 2008
Cephalon will plead guilty to a misdemeanor violation and pay $425 million to resolve criminal charges brought by the U.S. Department of Justice and a separate civil suit alleging the company marketed three of its drugs off-label from January 2001 through at least 2006.
The company announced a finalized agreement with the DOJ and the U.S. Attorney's Office for the Eastern District of Pennsylvania Sept. 29. The charges stem from an investigation into Cephalon's marketing practices for Gabitril, Actiq and Provigil that began in 2004.
Cephalon already notified investors last year of the pending deal. The firm reserved $425 million last year and will pay an additional $12 million in interest. Under the settlement, Cephalon also will enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General.
In a plea agreement with the U.S., Cephalon will pay $50 million. Under the separate civil settlement, Cephalon will pay $375 million plus interest. The civil settlement was between Cephalon, the U.S. government and various states, involving false claims against state and federal health care programs. The civil settlement also resolves four whistle blower actions filed in the Eastern District of Pennsylvania, three of which were filed by former employees.
Among the drugs Cephalon is accused of marketing inappropriately is the addictive pain drug Actiq (fentanyl), approved for a narrow indication in opioid tolerant cancer patients with breakthrough cancer pain but allegedly promoted by Cephalon for migraines, sickle-cell pain crises, injuries, wound dressings and radiation therapy.
According to the DOJ, Cephalon used the mantra "pain is pain" to encourage Actiq sales reps to target general practitioners, not just oncologists, and to promote the drug for uses other than breakthrough cancer pain.
Likewise, in the case of Gabitril(tiagabine), an anti-epilepsy drug that Cephalon allegedly promoted for anxiety, insomnia and pain, the company encouraged sales reps to visit psychiatrists, not just neurologists.
Provigil (modafinil) is FDA approved for treatment of excessive daytime sleepiness associated with narcolepsy, sleep apnea and shift work sleep disorder. However, the DOJ says Cephalon marketed the drug as a non-stimulant drug for treatment of sleepiness, tiredness, decreased activity, lack of energy and fatigue.
The company also structured its sales quotas and bonuses so that reps could not reach their sales goals unless they promoted and sold the drugs for off-label uses, the DOJ said.
"This company subverted the very process put in place to protect the public from harm and put patients' health at risk for nothing more than boosting its bottom line," Acting U.S. Attorney for the Eastern District of Pennsylvania Laurie Magid said in a statement.
In the criminal information filed by the attorney general's office, the document also says Cephalon provided more than $80 million from 2001 to 2004 to put toward continuing medical education programs to promote off-label uses for their drugs.
CIA requires transparency
Like other CIAs, Cephalon's five-year agreement requires that the company undertake several programs to increase transparency. For example, it requires that Cephalon send doctors a letter advising them of the settlement, that it post payments to doctors on its website and that the board of directors and management regularly certify that the company is in compliance with requirements.
"We believe our existing compliance policies and procedures already address the majority of the requirements outlined in the CIA and that the strong compliance infrastructure now in place has improved the accountability of our employees and the transparency of our actions," Cephalon said.
Last year, Cephalon said it had elevated the post of chief compliance officer to an executive VP role, reporting directly to CEO Frank Baldino. The company hired former assistant U.S. attorney Valli Baldassano as chief operating officer.
Investigations in two others states finished, too
Cephalon separately announced it has settled two outstanding investigations with the Connecticut and Massachusetts attorneys general's offices, which had similarly been investigating Cephalon's off-label marketing practices. Under the two arrangements, Cephalon will pay a total of $6.85 million.
In the settlement with the Connecticut Attorney General and Commissioner of Consumer Protection, Cephalon agreed to pay $6.15 million, including $3.8 million to the Connecticut Department of Public Health to fund state cancer initiatives, and $200,000 to fund an electronic prescription monitoring program. The Massachusetts settlement is smaller; Cephalon will pay $700,000.
-Jessica Merrill
Start your 30-day risk free trial of "The Pink Sheet Daily" today.
Companies mentioned in this article
Cephalon
U.S. Department of Justice
U.S. Attorney's Office
