Astellas Pharma US settles Mycamine False Claims Act case for $7.3 million

By Jon Campisi | Apr 17, 2014

A $7.3 million settlement has been reached with drugmaker Astellas

Pharma US Inc. over claims that it violated the False Claims Act by illegally marketing the antifungal drug Mycamine to children.

The settlement was announced Wednesday by a team of whistleblower lawyers from Philadelphia-based Sheller P.C.

The case began when former Astellas pharmaceutical sales representative Frank Smith contacted Sheller about the possible filing of a qui tam complaint with the U.S. Attorney’s Office in Philadelphia back in 2010.

The Sheller attorneys along with former Assistant U.S. Attorney Joseph Trautwein subsequently filed a complaint under seal.

Records show that the complaint was unsealed by federal prosecutors this week.

The civil action alleged that Astellas marketed Mycamine for off-label use in children – it had only been given FDA approval for adult treatment of the yeast fungus candida and thrush, which are infections found in the throat, stomach and other areas of the body.

Smith, the whistleblower, or “relator,” who filed the suit, contended that the company, through its off-label marketing of Mycamine, made illegal claims for reimbursement under federal healthcare programs.

“Children were put at risk of cardiac arrest, liver failure, kidney and blood disorders and other adverse effects,” Stephen Sheller, the founder of Sheller P.C., said in an interview with The American Law Journal television program. “There are children out there that may have these problems whose parents don’t know that the drug may have caused serious, potentially life-threatening conditions.”

More than two dozen other states joined the Sheller whistleblower complaint to recover funds that were improperly paid to the drug company by Medicare, Medicaid, TRICARE and other federal programs, according to the law firm.

“Pharmaceutical companies that place their financial interests above the well-being of their patients will be held accountable,” Sheller said. “We’ve been fighting these battles for many years, and we cannot, and should not, tolerate those who abuse federal and state health care programs and put the beneficiaries of these programs at risk.”

Trautwein, the former assistant prosecutor who worked on the case, told The American Law Journal that the government was dedicated to protecting the public when it comes to potentially dangerous pharmaceuticals.

“If you don’t follow the system, they’re going to come after you,” he stated. “Hopefully that message is getting across.”

The relator is the first person to file a whistleblower suit in a case alleging violations of the False Claims Act.

Astellas, which is based in Northbrook, Ill., made no admission of liability in the settlement.

In a Justice Department news release, Assistant Attorney General Stuart F. Delery, who is in charge of the department’s Civil Division, said that the government would hold accountable pharmaceutical companies that “skirt” FDA rules regarding drug approval processes that require companies to demonstrate the safety and efficacy of their products and seek to bill federal healthcare programs for uses of drugs that are not reimbursable.

Out of the $7.3 million settlement, the federal government will receive $4.2 million and state Medicaid programs are poised to receive $3.1 million.

Smith, the former Astellas sales rep and the relator in the whistleblower action, stands to receive a total of $708,852 from the settlement.

“The settlement in this case further demonstrates our commitment to hold responsible any pharmaceutical company that disregards the FDA drug approval process and promotes drugs for use before they have been deemed safe and effective,” Zane David Memeger, the U.S. Attorney for the Eastern District of Pennsylvania, said in a statement. “It’s a message that should resonate with all drug companies: there are consequences for violating the False Claims Act and putting profit ahead of government safeguards.”

The drug company’s alleged conduct occurred between 2005 and 2010.

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