Cephalon Inc. to pay enormous settlement after marketing its drugs for unapproved uses

October 9, 2008  |  Press Releases

Cephalon Inc., a U.S. drug maker based in Frazer, Pennsylvania, will finally have a rest from federal and state investigations into the company’s illegal marketing practices. But to get it, the company had to agree to very stiff criminal and civil penalties and to plead guilty to a violation of the U.S. Food, Drug and Cosmetic Act.

Cephalon has been the subject of intense investigations by the federal government and by the states of Connecticut and Massachusetts for marketing three of its drugs for unapproved uses: a painkiller drug, Actiq; an epilepsy drug, Gabitril; and a sleep medication, Provigil. Drug companies are permitted to promote their products only for treatment of conditions for which the drugs have been approved by the Food and Drug Administration. According to acting U. S. Attorney Laurie Magid: “These are potentially harmful drugs that were being peddled as if they were, in the case of Actiq, actual lollipops instead of a potent pain medication intended for a specific class of patients.”

The drug maker’s wrongdoing came to light after four different whistle blower actions were filed, three by the company’s former sales representatives. The suits were brought under the qui tam provision of the U.S. False Claims Act, allowing a private citizen to bring a claim for fraud on the government’s behalf. The Act also ensures that whistle blowers participate in any recovery received by the government. In Cephalon’s case, the vast majority of the settlement reached will go to reimburse Medicare, Medicaid and other federal programs. The company also settled the pending investigations in Connecticut and Massachusetts. Each of the whistle blowers will receive a percentage of the large federal settlements.

Despite its acknowledged wrongdoing, the company retains its ability to participate in all federal and state health care programs. But as part of a five-year corporate integrity program, Cephalon will be made to inform physicians of the settlement by letter and to provide doctors with the means to report questionable conduct by the drug maker’s sales representatives.

For the full story, go to Reuters.

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