Celgene pays $280M to make fraud allegations go away
- Celgene is handing over hundreds of millions of dollars to settle allegations that the big biotech illegally promoted two products off-label.
- Of the total $280 million included in the settlement, $259.3 million will go to the federal government and $20.7 million will go to 28 states and the District of Columbia, according to a July 25 statement from the U.S. Attorney's Office for the Central District of California.
- The agreement effectively ends a "whistleblower" complaint that former Celgene employee Beverly Brown filed back in 2010. The lawsuit claimed Celgene violated the False Claims Acts through misbranding its medications Thalomid (thalidomide) and Revlimid (lenalidomide) and offering kickbacks to physicians.
"Celgene has denied any wrongdoing in this matter, but is settling to avoid the uncertainty, distraction, and expense of protracted litigation," the company said in a July 25 statement. In its most recent 10-Q filing with the Securities and Exchange Commission, Celgene reported net cash from operating activities in the first quarter fell nearly 15% year-over-year to $853 million, and sited nearly $200 million worth of litigation-related loss contingency accrual as the main reason for the decline.
While the settlement allows Celgene to not admit liability, its price tag is hefty — equal to about 10% of the drugmaker's first quarter revenues. The hit wasn't enough to really rattle investor confidence, but the company's shares still fell 1.6% to by close-of-market Tuesday.
The money lost, however, is paltry compared to the revenue brought in by the two drugs at the center of the litigation. Worldwide net sales for Revlimid (lenalidomide), a drug indicated for multiple myeloma and mantle cell lymphoma, totaled $1.88 billion during the first quarter of 2017, while Thalomid (thalidomide), which first gained approval as a treatment for lesions associated with leprosy and later for multiple myeloma, garnered less than $224 million.
In the lawsuit, the plaintiffs contended that Celgene's off-label promotion of Thalomid and Revlimid put patients at risk for injuries such as severe nerve damage or life-threatening blood clots. Both Revlimid and Thalomid carry block box warnings.
Additionally, the company's "unlawful marketing scheme" resulted in city, state and federal governments paying for millions of prescriptions for those drugs whether other, safer alternatives were available.
Regarding Thalomid, for example, an amended version of the complaint filed in 2013 said the drug raked in huge revenues despite the fact that there "are, on average, only 200 new leprosy cases a year in the United States."
"Celgene was able to generate this large volume of sales by marketing Thalomid for numerous off-label uses, concealing its risks, and through the payment of kickbacks," the complaint added.
What's more, the lawsuit claimed the company pushed its staff to comply with the off-label promotion.
"Celgene trained and encouraged sales representatives to market these drugs for off-label uses with full knowledge of the increased risks these off-label uses might pose to patients, and without proper clinical evidence of their safety and/or efficacy for those off-label purposes," the lawsuit said.
The drugmaker has refuted those allegations, however.
"Celgene contends, and has contended throughout the litigation, that Thalomid and Revlimid are medical breakthrough medicines that have benefited patients with serious illnesses; that physicians prescribed these medicines based on their independent medical judgment; and that Celgene's relationships with physicians have been appropriate, and have helped to advance patient care and science," the company added.
"Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies," Acting U.S. Attorney Sandra Brown said in a July 25 statement from the U.S. Attorney’s Office for the Central District of California.
Follow Jacob Bell on Twitter