Celgene pays $280 Million to Settle False Claims Act (FCA) lawsuit alleging they misled to sell more drugs

August 9, 2017

A whistleblower’s lawsuit against one of the fastest-growing biotech firms in the country helped to recover nearly $280 million in false claims to Medicare and state health care systems. Under a settlement finalized a few weeks ago in California, Celgene agreed to pay $280 million to resolve the lawsuit. This puts an end to the case that would have proceeded to trial after a California judge set the whistleblower trial date earlier this year.

Beverly Brown, a sales manager who worked for Celgene for a decade, claimed in the lawsuit that Celgene was liable for up to $40 billion in reimbursements to Medicare. She alleged that Celgene aggressively promoted the drugs Thalomid and Revlimid for uses not yet approved by the FDA or covered by federal health care programs. Brown alleged that Celgene paid kickbacks to physicians to encourage them to prescribe the drugs.

Doctors enjoy a wide latitude in prescribing drugs, even for uses that are not yet approved. But drugmakers are not allowed to induce physicians toward using medicines that are not yet approved by regulators.

Noted Qui Tam Lawyer Jason T. Brown whose firm routinely handles false claims act litigation stated, “This is an excellent result for the consumers.  Pharmaceutical companies are prohibited from engaging in kickbacks to promote their products, and also to whisper to physicians that certain products have unapproved off label properties that the FDA did not vet.  In the end this makes people safer.”

Celgene’s settlement resolves but does not admit to the whistleblower Brown’s allegations. She filed the lawsuit under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can file a suit on behalf of the United States and share in any recovery.

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Big settlements, bigger drugs sale

The US Justice Department did not join in the lawsuit but monitored its development with the Civil Division’s Commercial Litigation Branch, and HHS-OIG. Still, the government stands to get the bigger chunk of the $280 million payout. The Justice Department said Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.

“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” said Acting United States Attorney Sandra R. Brown.

Celgene initially got U.S. Food and Drug Administration approval in 1998 for Thalomid’s use in treating leprosy. But whistleblower Beverly Brown alleged that the company hired more than 100 salespeople to push the drug to cancer doctors. Brown said in her complaint that even after the FDA approved Thalomid for multiple myeloma in the mid-2000s, Celgene continued to promote it for other forms of cancer, including cervix, thyroid, and brain.

Whistleblower Brown contended that what Celgene did — promoting the use of Thalomid for cancer problems even when it was not known to have that effect in the early years – amounted to “human experimentation.”

Thalomid and Revlimid are two drugs that made Celgene one of the fastest growing US biotech firms. Along with Pomalyst drug that followed Revlimid, these accounted for $8.4 billion or 75 percent of Calgene’s revenue last year. The $280 million settlement for alleged illegal use of drugs and false claims is just two-weeks’ worth of sale of Revlimid, based on Celgene’s preliminary 2016 unaudited financial results. . Celgene’s stock does not seem to have been hugely affected. It is more or less on the same level in July, and even slightly higher than in the previous months.

Celgene continues to deny the allegations by Beverly Brown. Its spokesman, Brian Gill, said they settled the suit to avoid the “uncertainty, distraction and expense of protracted litigation.”

Unlike other similar settlement, Celgene was not required to enter a corporate integrity agreement under the settlement.  Individuals who come forward with whistleblower information against pharmaceutical companies stand to make out well since qui tam awards can be from 15-25% of the recovery if the government intervenes or 30% for non-intervention.  Thus, Beverly Brown as the relator could stand to receive an award up to 80 million dollars for blowing the whistle on the alleged illegal kickback scheme and off label promotion.

The deal ranks among the top 100 false-claims accords in U.S. history despite that, $280-million dwarfs in comparison to Celgene’s revenue from the drugs involved in the lawsuit. #