By Karin Rives
For the second time in just four months, the U.S. Department of Justice has settled an off-label marketing case with a major drug maker that directly benefits 340B providers and state Medicaid agencies.
The $1.43 billion deal with Eli Lilly – the largest sum paid by a defendant in Justice Department history – signals that safety-net providers are firmly on track to receive potentially millions of dollars in damages in coming years as the government continues to challenge drug companies that allegedly violate federal marketing rules.
While physicians may legally prescribe drugs for uses beyond what the U.S. Food and Drug Administration (FDA) approved them for, drug companies cannot legally market off-label uses to doctors or their patients. Over the past few years, federal prosecutors have stepped up their efforts to crack down on such violations.
“The litigation and enforcement (against) improper off-label promotion has reached a feverish pitch in terms of the number of ongoing investigations,” noted Reed Stephens, a partner at the Washington, D.C., law firm of McDermott Will & Emery. Stephens is a former U.S. Department of Justice prosecutor who investigated a number of pharmaceutical manufacturers during his tenure in the government. He now represents several large drug makers and other clients in the health care industry.
States taking new interest in off-label cases
Not all off-label cases succeed. “(But) the odds are stacked heavily against manufacturers, because the states are beginning to carve out a role in regulating the marketing of drugs,” Stephens said.
An example of such state involvement would be the recent $60-million global consent agreement 33 state attorneys general and the District of Columbia reached with Pfizer over Bextra and Celebrex, he said. The two drugs, approved by the FDA to treat common pain and inflammation, were marketed illegally as treatment for acute surgical pain, a multi-state investigation concluded.
In the Lilly case, 340B-covered entities will receive more than $750,000 and affected state Medicaid programs more than $361 million in connection with sales of the anti-psychotic drug Zyprexa, federal prosecutors announced Jan. 15. The settlement came on the heels of a government deal with Cephalon over that company’s off-label marketing practices, which netted 340B entities $1.86 million in refunds. (See Monitor, Nov. 2008). Such deals should pave the way for future legal claims, Stephens said.
“As was the case with the early Medicaid drug rebate fraud settlements that began to incorporate 340B claims, (they) will create a mechanism for Public Health Service providers to receive funds that are owed to them,” he said.
Eli Lilly has been cooperating in the government’s investigation for the past four years and while it accepted the misdemeanor guilty charge, it never admitted to the allegations in the civil allegations.
“We deeply regret the past actions covered by the misdemeanor plea,” John Lechleiter, the company’s chief executive, said in a news release. “At Lilly we take seriously our responsibilities to abide by all the laws governing our business practices, and we realize that we have tremendous responsibility to the patients and healthcare professionals we serve.”
The company has agreed to mail out checks to covered entities that purchased Zyprexa through the 340B program no later than 60 days after the U.S. District Court for the Eastern District of Pennsylvania accepts the company’s guilty plea to criminal charges. The plea hearing was scheduled for Jan. 30. The time period of the alleged overcharges was from 1999 to 2005 and the amount of the refunds will be proportional to the amount of drug product purchased. By cashing the checks, 340B-covered entities and others parties covered under the deal agree to release Eli Lilly from liability.
Campaigns targeted nursing homes, primary care
According to federal prosecutors, Eli Lilly began to market Zyprexa to nursing home and primary care doctors in 1999 for ailments it was never approved for, such as dementia, depression and sleep disorders. Because a side effect of the drug is sedation, the Indiana-based company instructed its sales force to tell doctors that Zyprexa would help patients suffering from insomnia and behavioral problems, court documents show.
With sales slogans such as “5 at 5” (five milligrams of Zyprexa at 5 p.m.) and “Viva Zyprexa,” the company continued to promote the drug for unapproved uses, even though it received a written warning from the FDA to halt such practices, prosecutors say.
“Today’s disclosures should send a clear message to those doing business with the government that they will be held accountable for their decisions and actions that have an adverse impact on health care programs such as Medicare and Medicaid,” said an official with the U.S. Health and Human Services’ Office of Inspector General official the day the settlement was announced.