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Insight & Intelligence : Jan 29, 2013
Top 10 Biggest Biopharma Marketing Fines
Find out which companies have made false claims about their products—and are paying the most for it now.
How would you feel if you started taking a drug that had been advertised to treat your illness, only to discover it’s never been tested or approved to treat it? You’re not the only one who’d be angry; several well-known companies were caught doing just that, and are being forced to pay the piper to the tune of millions—and even billions—of dollars. GEN has compiled a list of the top 10 largest fines levied against pharmaceutical and biotech companies that marketed drugs for illegal off-label uses, either alone or in addition to other charges such as wrongfully seeking federal reimbursement for their medications through programs like Medicaid and Medicare.
Amount of Fine: $600 million
Drug(s) Involved: Botox for therapeutic indications (botulinum toxin type A)—$1.595 billion in 2011 sales for entire Botox franchise1
Date Penalty Approved and/or Announced: September 1, 2010
Details of the Admissions and Resulting Penalties: Allergan pleaded guilty to promoting off-label use of Botox for headache, pain, spasticity, and juvenile cerebral palsy. Allergan agreed to pay a $375 million criminal penalty—a figure that includes the forfeit of $25 million—and $225 million toward resolving federal and state civil claims that its unlawful marketing practices caused false claims to be submitted to government health care programs such as Medicare, Medicaid, TRICARE, and to the Federal Employees Health Benefit Program, the Department of Veterans’ Affairs, and the Department of Labor’s Office of Workers’ Compensation Programs. The federal share of the civil settlement amount was $210.25 million, with Allergan agreeing to pay up to $14.75 million to participating states.
#9. Purdue Pharma
Amount of Fine: $634.5 million
Drug(s) Involved: OxyContin (oxycodone)—$2.8 billion in 2011 sales
Date Penalty Approved and/or Announced: July 20, 2007
Details of the Admissions and Resulting Penalties: Purdue Pharma and three executives pleaded guilty to criminal charges and civil liabilities from a long-term illegal scheme, discovered by FDA’s Office of Criminal Investigations, to promote, market, and sell the drug. The company admitted that it falsely claimed to doctors and patients that OxyContin has a lower risk of abuse and addiction than competing painkillers including Percocet (oxycodone acetaminophen) and Vicodin (hydrocodone bitartrate and acetaminophen). The company agreed to pay $600 million in fines levied against Purdue; and $34.5 million against former company president Michael Friedman, general counsel Howard R. Udell, and former medical director Paul D. Goldenheim, M.D. Jones also placed the executives on three years' probation and sentenced them to 400 hours each of community service working with drug rehabilitation programs.
#8. Serono (now Merck Serono)
Amount of Fine: $704 million
Drug(s) Involved: Serostim (recombinant DNA somatropin)—2011 sales
Date Penalty Approved and/or Announced: October 17, 2005
Details of the Admissions and Resulting Penalties: Serono (now Merck Serono) pleaded guilty to charges that its Serono Laboratories unit conspired with medical device manufacturer RJL Sciences to market FDA-unapproved bioelectrial impedance analysis computer software packages for calculating body cell mass and diagnosing AIDS wasting. Serono Labs and RJL sought to increase the market for the devices/software in order to increase the market for Serostim. Serono Labs agreed to pay a $136.9 million criminal fine, and its affiliate companies, a total $567 million to settle civil liabilities that it knowingly submitted false and fraudulent claims ineligible for reimbursement because the claims covered off-label use of Serostim, and were for prescriptions induced by kickbacks. Of the civil settlement, $305 million plus interest went to the U.S. for losses suffered by the federal portion of the Medicaid program, the Veteran’s Administration, the Department of Defense, and the Federal Employees Health Benefits program; and nearly $262 million plus interest to the States toward reimbursing their Medicaid programs.
Amount of Fine: $762.1 million
Drug(s) Involved: Aranesp (darbepoetin alfa)—$2.303 billion in 2011 sales
Date Penalty Approved and/or Announced: December 19, 2012
Details of the Admissions and Resulting Penalties: Amgen admitted to illegally introducing a misbranded drug into interstate commerce by promoting off-label use of Aranesp for anemia caused by cancer. In the single largest criminal and civil fraud settlement involving a biotechnology company in U.S. history, Amgen agreed to pay a criminal fine of $136 million, forfeit $14 million, and pay a $612.1 million civil fine—$587.2 million to the federal government, $24.8 million to the states—to resolve claims that it caused false claims to be submitted to Medicare, Medicaid, and other government health care programs.
#6. Merck & Co.
Amount of Fine: $950 million
Drug(s) Involved: Vioxx (rofecoxib)—Withdrawn from the market in September 2004
Date Penalty Approved and/or Announced: April 19, 2012
Details of the Admissions and Resulting Penalties: Merck pleaded guilty to introducing a misbranded drug into interstate commerce by promoting Vioxx for treating rheumatoid arthritis, before that use was approved by FDA. Merck was sentenced to pay a $321.636 million criminal fine, and agreed pay a $628.364 million civil settlement to resolve allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety. Of the total civil settlement, $426.389 million will be recovered by the federal government, and the remaining $201.975 will be distributed to participating Medicaid states.
#5. Johnson & Johnson
Amount of Fine: $1.2 billion2
Drug(s) Involved: Risperdal (risperidone)—$1.583 billion in 2011 sales
Date Penalty Approved and/or Announced: April 11, 2012
Details of the Admissions and Resulting Penalties: Johnson & Johnson and its Janssen Pharmaceuticals subsidiary are appealing in Arkansas Supreme Court the $1.2 billion judgment they were ordered to pay the Arkansas Medicaid fund by Pulaski County (AR) Circuit Judge Tim Fox, after a jury convicted the companies of almost 240,000 violations of the state’s Medicaid law—namely, that they defrauded Medicaid by failing to properly outline the antipsychotic drug’s risks, which include diabetes, hormonal changes that affect the sexual development of children, increased likelihood of strokes in elderly people, and excessive weight gain in users of all ages.
The companies were also convicted of deceptively marketing the drug as safer, and thus better, than competing medicines. Arkansas Medicaid paid for 238,874 prescriptions—each of which, the state argued, was a violation of Medicaid fraud laws. J&J countered that the number of claims by the state should be 1,319.
#4. Eli Lilly
Amount of Fine: $1.415 billion
Drug(s) Involved: Zyprexa (olanzapine)—$4.622 billion in 2011 sales
Date Penalty Approved and/or Announced: January 15, 2009
Details of the Admissions and Resulting Penalties: Lilly pleaded guilty to a misdemeanor criminal charge of off-label marketing of the drug as a treatment for dementia, including Alzheimer’s dementia, in elderly people. Lilly agreed to pay a criminal fine of $515 million, the largest fine imposed to that date in a healthcare case, and the largest criminal fine for an individual corporation ever imposed to that date in a U.S. criminal prosecution of any kind. Lilly also agreed to forfeit $100 million, and pay up to $800 million in a civil settlement with the federal government and the states to resolve civil allegations that its off-label marketing caused false claims for payment to be submitted to federal insurance programs such as Medicaid, TRICARE, and the Federal Employee Health Benefits Program.
#3. Abbott Laboratories
Amount of Fine: $1.6 billion
Drug(s) Involved: Depakote (divalproex sodium)—$148 million in 2011 U.S. sales
Date Penalty Approved and/or Announced: October 2, 2012
Details of the Admissions and Resulting Penalties: Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote by marketing the drug off-label to treat behavioral disturbances in dementia patients from January 1998 to December 2006, and schizophrenia from January 2002 to December 2006. Abbott was ordered to pay the second-largest fine for an individual drug including a $500 million criminal fine, forfeit $198.5 million, and pay $1.5 million to the Virginia Medicaid Fraud Control Unit. The company also agreed to pay $100 million to resolve state consumer-protection claims and $800 million to the federal government and the states to resolve civil claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government healthcare programs.
Amount of Fine: $2.3 billion
Drug(s) Involved: Lyrica (pregabalin)—$3.693 billion in 2011 sales
Date Penalty Approved and/or Announced: September 2, 2009
Details of the Admissions and Resulting Penalties: Pfizer’s Pharmacia & Upjohn subsidiary pleaded guilty to a felony violation of the Food, Drug, and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. In addition, Pfizer agreed to pay a criminal fine of $1.195 billion, the largest U.S. criminal fine ever imposed to that date. Pharmacia & Upjohn also agreed to forfeit $105 million, for a total criminal resolution of $1.3 billion. Pfizer agreed to pay $1 billion to resolve allegations that the company illegally promoted the drugs, and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The federal share of the civil settlement was $668,514,830 and the state Medicaid share, $331,485,170.
Amount of Fine: $3 billion
Drug(s) Involved: Paxil (paroxetine)—$701.4 million in 2011 sales3
Date Penalty Approved and/or Announced: July 2, 2012
Details of the Admissions and Resulting Penalties: GSK pleaded guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce, and one count of failing to report safety data about Avandia to FDA. GSK also agreed to pay $1 billion consisting of a criminal fine of $956,814,400 and forfeiture of $43,185,600; as well as a $2 billion civil settlement resolving federal and state relating to Paxil, Wellbutrin, and Avandia as well as additional drugs, and also resolving pricing fraud allegations.
Sales figures come from biopharma companies and are rounded off to tenths except where the companies furnished more detailed numbers.
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