Dive Brief:
- A federal judge on Tuesday sentenced Aegerion Pharmaceuticals Inc. to pay a $40 million penalty for illegally marketing its high cholesterol drug for conditions outside of the treatment's label.
- As part of the settlement deal, the judge ordered $7.2 million of the penalty go toward a restitution fund to compensate individuals who improperly received the drug, which is sold as Juxtapid.
- "The Court's sentence is an important milestone that allows us to move forward focusing on our business priorities, namely reviewing our capital structure in an attempt to leverage its flexibility, and providing important therapies to patients with rare diseases," said Jason Aryeh, chairman of Novelion Therapeutics Inc., Aegerion's parent company.
Dive Insight:
The sentence, handed down by U.S. District Court Judge Matthew Young in Massachusetts, should wrap up legal proceedings that have weighed heavily on Aegerion, even after it merged with QLT Inc. and became a subsidiary of Novelion.
Young initially rejected Aegerion's plea agreement with the Department of Justice and Securities and Exchange Commission in November. Under Tuesday's sentence, Aegerion won't pay a criminal fine. Instead, Young ordered $7.2 million of the total penalty fund to go toward compensating individuals who suffered from improperly receiving Juxtapid (lomitapide).
Nearly $29 million will go to the DOJ and the remaining $4.1 million will be paid as a civil penalty to the SEC. The DOJ civil settlement and a separate consent decree are still subject to approval by other district court judges.
Even though the $7.2 million will go to a restitution fund rather than criminal fine, the financial impact will remain identical, the company said.
Juxtapid was approved by the Food and Drug Administration in 2012 for treatment of patients with homozygous familial hypercholesterolemia, a rare genetic disease. Despite a narrow label and cautions from the FDA, Aegerion began marketing Juxtapid in a manner designed to encourage physicians to prescribe the drug for a broader pool of patients.
A warning letter from the FDA and federal investigation soon followed, leading to the removal of the company's former CEO and chief operating office. In 2016, the company said it would plead guilty to the government's charges and agreed to pay the $40.1 million.
While it won't pay a criminal fine, Aegerion did plead guilty to two counts of misdemeanor misbranding.
The delay in resolving the government's litigation has crimped Aegerion's — and its parent Novelion's — ability to move forward.
Just last week, Novelion announced it would cut costs and reduce the size of its workforce. The company listed $70.5 million in cash and equivalents as of Sept. 30 in its latest regulatory filing.