Sun Pharma Subsidiary Agrees to Pay $20.75 Million to Resolve False Claims Act Allegations
At the end of August 2020, Massachusetts-based DUSA Pharmaceuticals (DUSA) – a subsidiary of Sun Pharmaceutical Industries, Inc. (Sun Pharma) – agreed to pay $20.75 million in a settlement with the United States Department of Justice (DOJ) over allegations that DUSA caused physicians to submit false claims to Medicare and the Federal Employee Heath Benefit Program. The false claims were supposedly caused to be submitted because of the way DUSA knowingly promoted an administration process for Levulan Kerastick (a prescription cream used to treat actinic keratoses on areas of the face and scalp) that contradicted the product instructions approved by the United States Food and Drug Administration (FDA) and that was unsupported by sufficient clinical evidence.
According to the DOJ, at all relevant times, the “Dosage and Administration” section of the drug’s FDA-approved instructions described a two-stage process involving application of the topical solution to the target lesions and then, following an incubation period of 14 to 18 hours, illumination of the target lesion with blue light.
However, according to allegations made against DUSA, by January 2014, senior management at DUSA and Sun Pharma knew that the administration of the drug using shorter incubation periods between one to three hours resulted in actinic keratoses clearance rates significantly lower than those achieved in the clinical trials with a 14 to 18-hour incubation period. That fact notwithstanding, between January 2014 and December 2016, DUSA allegedly encouraged physicians to use the shorter, less effective, incubation periods via speaker programs, paid physician peer-to-peer discussions, promotion by DUSA’s sales force, and disseminating either incomplete or misleading responses to questions from prescribing physicians.
The DOJ also alleged that DUSA did not inform physicians that by using the shorter incubation periods, there would be significantly lower actinic keratoses clearance rates than with the longer incubation period found in the FDA-approved instructions. In some instances, DUSA allegedly even went so far as to incorrectly state that clearance rates were the same for both the shorter and FDA-approved incubation periods.
This settlement resolves a lawsuit brought under the qui tam provision of the False Claims Act by Aaron Chung, a former DUSA sales representative. For his part, Mr. Chung will receive approximately $3.5 million.
Corporate Integrity Agreement
DUSA and Sun Pharma have agreed to enter into a five-year Corporate Integrity Agreement (CIA) with the United States Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA, in part, requires that procedures and reviews be put in place to avoid – and promptly detect – any conduct similar to that which gave rise to this matter.
Some of the requirements also include the need to appoint a Compliance Officer who reports directly to the CEO of Sun Pharma and who does not have any responsibilities that involve acting as legal counsel or supervising legal counsel functions for Sun Pharma. The compliance officer will be responsible for, among other things, making at least quarterly in-person reports regarding compliance matters to the Board of Directors and written documentation of those reports shall be made available to HHS OIG upon request. The compliance officer will also be responsible for monitoring the day-to-day compliance activities at Sun Pharma and any reporting obligations created under the CIA. Any noncompliance job responsibilities shall be limited and must not interfere with the duties required by the CIA.
As alluded to above, the Board of Sun Pharma will be responsible for the review and oversight of compliance matters and must include an independent (non-employee and non-executive) member. The Board will be required to meet at least quarterly to review and oversee the compliance program and submit to HHS OIG a description of the documents and other materials reviewed, and any additional steps taken, in its oversight of the compliance program. Further, the Board will be required to adopt a resolution each reporting period (at least once a year), signed by each member of the Board, that summarizes its review and oversight of Sun Pharma’s compliance with not only the CIA, but also Federal health care program requirements and FDA requirements.