Drugmaker Cephalon Completes $443.9M Settlement With DOJ, States Related To Allegations Of Improper Sales, Marketing Practices

Main Category: Pharma Industry / Biotech Industry
Also Included In: Litigation / Medical Malpractice;  Health Insurance / Medical Insurance
Article Date: 02 Oct 2008 - 6:00 PDT

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Cephalon on Monday completed a $443.9 million settlement with federal and state regulators related to allegations of improper sales and marketing practices, the Wall Street Journal reports. Under the settlement, first disclosed in November 2007, Cephalon agreed with the Office of the U.S. attorney in Philadelphia and the Department of Justice to plead guilty to one misdemeanor violation of the U.S. Food, Drug and Cosmetic Act for the sale and promotion of three medications -- the cancer pain medication Actiq, the sleep disorder treatment Provigil and the epilepsy medication Gabitril -- for off-label uses (Loftus/Gryta, Wall Street Journal, 9/30). The AP/Houston Chronicle reports that Actiq, a narcotic lollipop, was marketed for migraines and injuries, yet was approved only for cancer patients with severe pain (Dale, AP/Houston Chronicle, 9/30).

Cephalon also agreed to pay $425 million, which the company placed in reserve in November 2007, as well as $12 million in interest that has accrued since that time (Wall Street Journal, 9/30). The $425 million payment includes $375 million for a civil settlement, $40 million for a criminal fine and $10 million for criminal forfeiture. According to AP/Chronicle, much of the recoveries will go towards Medicaid, which covered the cost for many of the prescriptions (AP/Houston Chronicle, 9/30).

As part of the settlement, Cephalon also agreed to pay $6.15 million to Connecticut and $700,000 to Massachusetts to settle similar allegations (Grace, Dow Jones, 9/29). In addition, Cephalon agreed to enter into a five-year corporate integrity agreement with the HHS Office of Inspector General (Wall Street Journal, 9/30).

The allegations against Cephalon resulted from whistle-blower lawsuits filed by four former employees. Under the settlement, the whistle blowers will receive a combined $46.5 million.

Acting U.S. Attorney Laurie Magid said, "I can't tell you a specific person who died, or was harmed, by the off-label marketing," adding, "We know in the case of these drugs, patients were harmed, including death, when there was off-label use" (Loyd, Philadelphia Inquirer, 9/30).

In a statement released on Monday, Jerry Pappert, executive vice president and general counsel at Cephalon, said, "We are pleased to have these long-standing matters behind us, while preserving our ability to participate in all federal and state health care programs, thereby maintaining the access of patients in those programs to our medications" (AP/Houston Chronicle, 9/30).

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