Celgene Corporation has settled a whistleblower lawsuit for $280 million, alleging that the pharmaceutical company committed fraud promoting Thalomid, a cancer drug allegedly promoted for uses not approved by the United States Food and Drug Administration (FDA). The settlement will be broken up between the United States and twenty-eight states and Washington, D.C. California will receive the largest state sum, $4.7 million.
The payment is equivalent to about two weeks’ worth of sales of Revlimid, which generated $6.97 billion in revenue for Celgene last year, according to data compiled by Bloomberg.
The settlement, initiated by a suit filed by a sales manager with Celgene, Beverly Brown, resolved allegations that Celgene promoted Thalomid and Revlimid – both cancer drugs – for uses that were not approved by the FDA and were not covered by federal healthcare programs.
According to the lawsuit, Brown was officially an “immunology specialist,” trained by Celgene to promote Thalomid and Revlimid drugs for cancer treatments that had not been approved by the U.S. Food and Drug Administration.
Brown, who worked at Celgene for a decade, alleged the company paid doctors and hired ghostwriters to tout uses for Thalomid beyond the product’s approval, including treating blood cancer, years before it was authorized by regulators. Brown said the company used similar tactics to promote Thalomid’s successor, Revlimid.
Thalomid, a drug prescribed for morning sickness in the 1950s and 1960s that caused severe birth defects, was approved by the agency in 1998 for treating leprosy.
The lawsuit noted that the FDA contacted Celgene and sent letters warning about its promotional efforts and for failing to warn about potential fatal risks from the toxic drugs. Because Thalomid would only be useful to a fraction of the few hundred leprosy cases diagnosed in the U.S. each year, the company developed a plan to promote the drug for cancer, the lawsuit said.
Included in the allegations were that “false and misleading statements” were used to promote the drugs, and kickbacks were paid to physicians to compel them to prescribe the drugs. The lawsuit also claimed Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state healthcare programs, including California’s Medi-Cal program.
A judge threw out the kickbacks allegation last year, but allowed the lawsuit to proceed. Under the False Claims Act, Brown can receive 25 percent to 30 percent of the settlement. She would have been eligible for a smaller share if the government had intervened to take over the case.
Celgene denied wrongdoing and settled to avoid uncertainty, distraction and expensive litigation, the company said in a statement. Celgene does not have to enter into a corporate integrity agreement as part of the settlement.