- From LexisNexis® Mealey’s™ Daily Legal News.
Par Pharmaceutical Cos. Inc. on March 5 pleaded guilty to misbranding its Megace ES anti-wasting drug by promoting it for off-label use in geriatric patients and will pay $ 45 million to resolve criminal and civil allegations, according to the U.S. Attorney’s Office for the District of New Jersey (United States of America v. Par Pharmaceutical Companies, Inc., No. n/a, D. N.J.).
In doing so, Par Pharmaceutical also agreed to dismiss with prejudice its civil lawsuit that sought a declaratory finding that federal restrictions on off-label promotion of Megace ES restricted the company’s rights under the First Amendment, according to a plea agreement (Par Pharmaceutical, Inc. v. United States of America, et al., No. 1:11-cv-1820, D. D.C.).
The U.S. Attorney’s Office said Par CEO Paul V. Campanelli pleaded guilty on behalf of the company to one count of misbranding a drug before U.S. Magistrate Judge Madeline Cox Arleo of the District of New Jersey. It said the magistrate judge fined Par $ 18 million and ordered it to forfeit $ 4.5 million.
Under a plea agreement, Park also agreed to pay the federal government and various states $ 22.5 million to resolve claims in three whistle-blower lawsuits that it violated the False Claims Act by causing Medicare and federal health care programs to pay for unapproved uses of Megace ES, the office said.
Geriatric Patients Targeted
The federal government filed a criminal information against Par Pharmaceutical in the District of New Jersey. The government says Megace ES was approved to treat anorexia, cachexia or other significant weight loss suffered by patients with AIDS.
The information says that between July 2005 and September 2007, Par realized that the market for Megace ES was small and that the drug would not meet its sales goals. When Par learned that some doctors were prescribing the drug off-label to treat weight loss in geriatric patients, such as those in nursing homes, the government says Par formed sales teams and created sales techniques to target doctors.
Sales representatives, the information says, were compensated solely on the amount of Megace ES sales credited to them and top performers were awarded high-value prizes such as trips to a Mexican resort. In addition, the government says that in contravention of privacy rules of the Health Insurance Portability and Accountability Act (HIPAA), Par sales representatives asked health care providers to provide them with the names of patients who were being treated for weight loss.
The government says Par pushed Megace ES for geriatric patients even though it knew that the patient population was susceptible to the side effects of Megace ES, including an increased risk of deep-vein thrombosis, toxic reactions, impaired renal function and death.
Bonus Claw-Back Provision
In the plea agreement, Par agrees to stop compensating sales representatives and sales managers based on the sales volume of Megace ES or any successor drug. Par also agrees to change its executive compensation program to allow the company to recoup annual bonuses from executives if they or their subordinates engage in significant misconduct.
The three False Claims Act lawsuits settled by the agreement are United States of America ex rel. McKeen, et al. v. Par Pharmaceutical, et al (No. n/a/, D. N.J), United States of America ex rel. Thompson v. Par Pharmaceutical, et al. (No. n/a, D. N.J.) and United States of America ex rel. Elliott, et al. v. Bristol-Myers Squibb, et al. (No. n/a, D. N.J.).
According to the U.S. Attorney’s Office, two relators in the McKeen False Claims Act complaint will receive a statutory share of $ 4.4 million of the False Claims Act settlement.
In addition to the guilty plea and monetary penalties, Par agreed to enter into a five-year corporate integrity agreement with the Office of Inspector General for the U.S. Department of Health and Human Services, the U.S. Attorney’s Office said.
The federal government is represented in the criminal complaint and the plea agreement by U.S. Attorney Paul J. Fishman and Joseph Mack and Shannon Singleton of the U.S. Attorney’s Office in Newark. Par is represented by John N. Nassikas of Arnold & Porter in Washington, D.C.
In the First Amendment action, the government is represented by Stuart F. Delery, Maame Ewusi-Mensah, Michael S. Blume and Gerald C. Kell of the U.S. Justice Department in Washington. Par is represented by Robert J. Katerberg, Lisa S. Blatt, Laura Lester, R. Stanton Jones and John Nassikas of Arnold & Porter in Washington.