TRENTON
- Attorney General Anne Milgram announced
today that New Jersey will receive nearly
$2.5 million in restitution in a national
Medicaid fraud settlement with pharmaceutical
company Cephalon Inc. regarding illegal
off-label marketing of prescription drugs.
Under
the national settlement, Cephalon will pay
a total of $425 million, plus interest,
to resolve criminal charges and civil liabilities
for off-label marketing involving the prescription
drugs Gabitril, Provigil and Actiq.
The
settlement arose from federal and state
false claim actions filed by the U.S. Attorney’s
Office for the Eastern District of Pennsylvania
and several states. New Jersey headed a
team of state Medicaid Fraud Control Units
that worked with the U.S. Department of
Justice to negotiate the settlement.
Cephalon
will pay a $50 million criminal fine and
$375 million to Medicaid and other federal
government healthcare programs that paid
reimbursements for medically unnecessary
treatments as a result of the illegal practices.
Medicaid
is jointly funded by the state and federal
governments. New Jersey has reached an agreement
in principle with Cephalon under which the
joint federal and state settlement payment
to the New Jersey Medicaid program will
be $5,219,430. The state’s share is
$2,479,755.
“Through
settlements such as this one, we are recovering
millions of dollars that will be used by
the New Jersey Medicaid program to assist
people who otherwise could not afford vital
health care services and prescription drugs,”
said Attorney General Milgram. “We
are committed to investigating and prosecuting
Medicaid fraud and other abuses affecting
our Medicaid program.”
Attorney
General Milgram credited Assistant Attorney
General John Krayniak, Senior Counsel in
New Jersey’s Medicaid Fraud Control
Unit in the Office of Insurance Fraud Prosecutor,
with helping to negotiate the settlement
with state and federal authorities. Krayniak
led the team of state negotiators for the
National Association of Medicaid Fraud Control
Units.
In
connection with the settlement, Cephalon
will plead guilty to a misdemeanor violation
of the federal Food, Drug, and Cosmetic
Act. The U.S. Attorney’s Office for
the Eastern District of Pennsylvania charged
Cephalon today in a criminal information
filed in U.S. District Court. Cephalon also
entered into a Corporate Integrity Agreement
with the Department of Health and Human
Services, Office of the Inspector General.
Cephalon
engaged in a company-wide scheme to illegally
market the prescription drugs Actiq, Gabitril,
and Provigil for unapproved “off-label”
uses. Before approving a drug, the Food
and Drug Administration must determine that
the drug is safe and effective for the use
proposed by the company. The drug may not
be marketed for “off label”
uses not approved by the FDA.
Actiq
is a strong and highly addictive narcotic
product manufactured as a lollipop that
was approved by the FDA for use only in
opioid-tolerant cancer patients or those
patients for whom morphine-based painkillers
are no longer effective. However, from 2001
through at least 2006, Cephalon promoted
the drug for non-cancer patients to treat
conditions such as migraines, sickle-cell
pain crises, injuries, and in anticipation
of changing wound dressings or radiation
therapy. Cephalon also promoted Actiq for
patients who were not yet opioid tolerant,
for whom it could have life-threatening
results. Despite Actiq’s limited approved
use, Cephalon marketed the drug to general
and family practitioners, as well as physicians
specializing in internal medicine, in order
to expand the market beyond breakthrough
cancer pain.
Gabitril
is FDA-approved for use
as an anti-epilepsy drug in the treatment
of partial seizures. However, from 2001
to 2005, Cephalon allegedly marketed Gabitril
as a safe and effective treatment for additional
conditions including depression, anxiety,
Tourette’s syndrome, and chronic pain.
Cephalon told its sales force to visit not
just neurologists, but also psychiatrists
to promote off-label uses. In 2005, after
reports of seizures in patients taking Gabitril
who did not have epilepsy, the FDA required
Cephalon to issue a warning notice to doctors.
It later required Cephalon to educate doctors
and discourage them from writing off-label
Gabitril prescriptions.
Provigil
is FDA-approved to treat
narcolepsy, sleep apnea and sleep disorders
associated with shift work. However, from
2001 through 2006, Cephalon illegally marketed
Provigil for off-label conditions including
fatigue associated with depression, multiple
sclerosis, schizophrenia, Parkinson’s
disease, chronic fatigue syndrome, anxiety,
neuropathic pain, and attention deficit/hyperactivity
disorder in children. In 2002, the FDA sent
Cephalon a letter instructing the company
not to continue to promote Provigil off-label,
which the company ignored.
Cephalon
also violated the federal Anti-Kickback
Statute by (1) sponsoring Continuing Medical
Education (CME) programs to fund expensive
vacations for attending physicians; (2)
providing grants to physicians to reward
high-volume prescribers; (3) paying excessive
fees to physicians to speak on behalf of
the company at CME programs; and (4) providing
paid incentives to sales representatives
to encourage off-label promotion. Additionally,
with regard to Gabitril, Cephalon disseminated
off-label promotional literature to physicians
at CME programs.
In
addition to the senior counsel from New
Jersey, the team of negotiators for the
National Association of Medicaid Fraud Control
Units included representatives from South
Carolina, Oregon, Ohio, and Virginia.
In
Medicaid settlements in 2008, New Jersey
recovered $7.4 million from Merck &
Co. in February; $1,758,000 from Purdue
Pharma in January; $1 million from Walgreens
in June; $350,000 from CVS/Caremark in March;
and $195,000 from Aventis in February.
Attorney
General Milgram noted that New Jersey has
a new tool to combat Medicaid fraud. She
explained that in January, Governor Corzine
signed the New Jersey False Claims Act,
which contains a whistleblower provision
to provide rewards to people, often corporate
insiders, who blow the whistle on fraud.
New
Jersey administers the Medicaid program
through the Division of Medical Assistance
and Health Services and through the Medicaid
Fraud Control Unit in the Office of Insurance
Fraud Prosecutor, which investigates both
criminal and civil Medicaid fraud and abuse
in that program.
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