Cephalon Inc agrees to pay $425 million in plea deal

Biopharmaceutical Company, Cephalon, To Pay $425 Million & Enter Plea to Resolve Allegations of Off-Label Marketing


Last update: 1:01 p.m. EDT Sept. 29, 2008
WASHINGTON, Sept 29, 2008 /PRNewswire-USNewswire via COMTEX/ -- Cephalon Inc. will enter a criminal plea and pay $425 million to resolve claims that it marketed three drugs for uses not approved by the Food and Drug Administration (FDA), the Justice Department announced today.

The lawsuits were brought by former Cephalon employees and filed under the qui tam provisions of the False Claims Act. The suits alleged that Cephalon engaged in a scheme to market Gabitril, Actiq and Provigil for unapproved uses in violation of the Food, Drug and Cosmetic Act, which requires a company to specify the intended uses of a product in its new drug application to the FDA. Once approved, the drug may not be marketed or promoted for so-called "off label" uses -- any use not specified in an application and approved by FDA.

The suits against the company alleged that, as a result of Cephalon's off-label marketing campaign, false claims for payment were submitted to federal insurance programs such as Medicaid and the Federal Employee Health Benefits Program which did not provide coverage for such off-label uses. A criminal information also filed by the Justice Department alleges that, between approximately January 2001 and 2006, Cephalon also promoted the drugs for uses other than what the FDA approved. The company is charged with one count of Distribution of Misbranded Drugs: Inadequate Directions for Use, a misdemeanor offense.

In a separate civil settlement executed contemporaneously with this guilty plea agreement, Cephalon will pay $375 million, plus interest, to resolve False Claims Act allegations arising from claims to Medicaid, Medicare and other federal programs, including TRICARE, the Federal Employees Health Benefits program, the Postal Worker's Compensation Program, the Federal Employees Compensation Act Program, the Every Employees Occupational Illness Compensation Program, Department of Veterans Affairs, Defense Logistics Agency, Bureau of Prisons and the Public Health Service Entities. The state Medicaid programs of California, Delaware, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Hampshire, New Mexico, Texas, Tennessee, Virginia and the District of Columbia will share $116 million of the civil settlement.
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