It was announced on October 30, 2012 by the Texas Attorney General that the Swiss pharmaceutical company Novartis has agreed to pay $19.9 million to settle a civil Medicaid fraud enforcement action by the State of Texas and the U.S. government that alleged that it illegally marketed for “off-label” uses its topical skin creme Elidel that had been approved by the FDA to treat eczema on patients older than two years old and whose eczema was not well-controlled by preferred first-line treatments.
The Texas investigation alleged that Novartis unlawfully and deceptively marketed Elidel to treat infant children while failing to disclose the drug’s known harmful side effects, which include cancer-related risks (the FDA required Novartis to put a “Black Box Warning” on Elidel packaging in 2005 to warn physicians and consumers that certain cancers in infants were associated with the use of Elidel).
Texas investigators alleged that Novartis urged physicians in Texas to prescribe Elidel for use by children under two years of age, which had been specifically rejected by the FDA. In doing so, Novartis’ actions resulted in ovepayments for Elidel by the Texas Medicaid program. Because the Texas Medicaid program is funded by both the State of Texas and the federal government, the federal government is entitled to share in the settlement recovery (Texas will receive $6,638,250 from the settlement amount). The whistleblower who uncovered and reported the alleged illegal activities will be entitled to an undisclosed share of the settlement payment pursuant to the Texas Medicaid Fraud Prevention Act, which provides that a whistleblower is entitled to between 15% and 25% of the settlement amount. The whistleblower and the Texas Attorney General’s Office will also recover their respective investigative and legal costs associated with the matter.
The whistleblower was a former marketing representative for Novartis who was involved in the marketing of Elidel. The whistleblower had originally filed a federal lawsuit in the U.S. District Court in Pennsylvania, alleging that Novartis paid illegal kickbacks to physicians to encourage them to prescribe Elidel for off-label uses. The U.S. Department of Justice had the right to intervene in the Pennsylvania federal lawsuit but declined to do so. The whistleblower proceeded with his Pennsylvania federal lawsuit on behalf of the United States and California, Massachusetts, Virginia, Illinois, Michigan, and Texas. However, the claims on behalf of Texas were voluntarily dismissed and later resulted in the Texas settlement announced on October 30, 2012.
It seems as though every few weeks, we read about another pharmaceutical company agreeing to pay many millions of dollars to settle claims involving the marketing of their products. It seems clear to us that drug manufacturers are well-aware of the FDA-approved uses of their drugs and that they know they cannot market or encourage their sales staff to urge physicians and other prescribers to use their drugs for off-label (unapproved by the FDA) purposes.
Why do some pharmaceutical companies promote off-label marketing of their products? The answer is both simple and obvious: the vast amount of profit that can be earned when their products are prescribed and consumers use their products, often over extended periods of time involving multiple purchases of the drugs.
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