Pennsylvania Record

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Pa.-based Endo Pharmaceuticals agrees to $171.9 million Lidoderm False Claims Act settlement

By Jon Campisi | Feb 24, 2014

Endo Health Solutions Inc. and its subsidiary, Endo Pharmaceuticals, have

agreed to a $171.9 million settlement with the federal government to resolve off-label marketing allegations involving the Lidoderm pain patch, government lawyers in Philadelphia announced late last week.

The Chester County-based specialty pharmaceutical company had been named in a whistleblower, or qui tam, suit filed in the Eastern District of Pennsylvania that alleged it marketed the pain patch for uses not approved by the Food and Drug Administration.

According to the government, Lidoderm was only approved by the FDA for relief of pain associated with post-herpetic neuralgia, which is a painful condition that affects certain people with a history of shingles.

Between the spring of 1999 and the winter of 2007, however, the company knowingly promoted the pain patch for treatment of other conditions, such as lower back problems and chronic pain, the U.S. Attorney’s Office in Philadelphia announced.

The government stated that because those uses of the product were not medically accepted indications, federal healthcare programs such as Medicare and Medicaid, would not cover such uses.

Endo’s off-label promotion of Lidoderm ended up causing healthcare providers to submit false reimbursement claims for the non-covered uses.

The drug company will pay $137,700,172 to the U.S. Government and a total of $34,209,981 to various states and the District of Columbia, the U.S. Attorney’s Office announced.

The initial qui tam whistleblower complaint, the first of three, was brought by Peggy Ryan, a former Endo sales representative whose sales territory included upstate New York.

Ryan’s share of the settlement has not yet been determined.

In qui tam actions, private citizens can bring suit against a company accused of False Claims Act violations in the name of the federal government.

“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” Zane David Memeger, the U.S. Attorney for the Eastern District of Pennsylvania, said in a statement released Friday. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”

Piggybacking on Memeger’s statement, Stuart F. Delery, the assistant attorney general for the Civil Division of the U.S. Justice Department, said that the FDA’s drug approval process is designed to ensure that pharmaceutical companies create products for uses that are proven to be safe and effective.

“We will hold accountable those who circumvent that process in pursuit of financial gain,” he stated.

Daniel R. Levinson, the inspector general of the U.S. Health and Human Services Department, said that by marketing Lidoderm off-label, Endo profited at the expense of taxpayers and would have put patients at risk of harm.

As part of the settlement with the government, Endo has agreed to enter into a Corporate Integrity Agreement with Levinson’s office that requires the drug company to implement measures designed to avoid or detect conduct such as that which was the basis for the whistleblower complaint.

The company has also agreed to create an internal risk assessment and mitigation program, conduct numerous internal and external reviews of promotional and other practices, have key executives and board members sign compliance certifications, and conduct public reporting of information about Endo’s financial arrangements with doctors.

On the day the settlement was announced in Philadelphia, the U.S. Attorney’s office for the Northern District of New York announced Endo’s additional deferred prosecution agreement to pay $20.8 million in criminal forfeiture and fines to resolve related criminal liability, according to prosecutors.

The agreement resolves the criminal charge that Endo admitted it intended that Lidoderm be used for unapproved indications and that it promoted the pain patch to healthcare providers for the unapproved uses.

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