Drug manufacturer reaches $425 million fraud settlement

Drew Smith Sep. 29, 2008, 12:28pm

Richard Blumenthal (D)

HARTFORD, Conn. (Legal Newsline) -- Cephalon, a Frazer, Pa.-based drug manufacturer, has announced a $425 million Medicaid fraud settlement for off-label drug marketing.

After a four-year investigation by federal and state authorities, the company was found to have marketed three drugs -- Actiq, Gabitril and Provigil -- for un-approved uses.

"Cephalon put profits over patients -- illegally promoting drugs at any cost to patients, and endangering public safety," Connecticut Attorney General Richard Blumenthal said in a statement.

Blumenthal's office participated in the investigation and settled a separate suit with Cephalon for $6.15 million.

"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," said Jerry Pappert, executive VP and general counsel for Cephalon.

Actiq is a pain medication with potency 100 times stronger than morphine. It was designed to treat cancer patients, but Cephalon was accused of marketing the drug to "virtually any physician who could treat chronic pain."

Gabitril is a drug that was meant to treat seizures but was found to actually cause seizures when prescribed off-label to patients who were not epileptic. After Cephalon's aggressive promotion, sales of the drug grew from $4.3 million in 2000 to $66.5 million in 2005.

In addition to paying the $425 million fine to federal authorities and $6.15 million to Connecticut, the company must also pay $12 million in accrued interest. Cephalon must also plead guilty to a misdemeanor violation and enter into a five-year Corporate Integrity Agreement.

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