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From Health Law Daily, April 17, 2015

Cephalon still on the hook for false claims, off-label promotion

By Kayla R. Bryant, J.D.

Several allegations related to the submission of false claims survived a motion to dismiss in a qui tam action in which the federal government has intervened. The U.S. District Court for the Eastern District of Pennsylvania dismissed claims brought against Cephalon, Inc. under various state laws as well as a claim of failure to comply with a corporate integrity agreement (CIA) entered into with the HHS Office of Inspector General (OIG). Several other claims were allowed to proceed (U.S. ex rel. Boise v. Cephalon, Inc., April 15, 2015, O’Neill, T.).

Claims. Former employers of Cephalon, a pharmaceutical company, alleged several violations of the False Claims Act (FCA) (31 U.S.C. §3729) based on the drugs Provigil and Nuvigil. Both drugs are approved for adult patients who experience excessive sleepiness due to sleep disorders. Cephalon allegedly: (1) promoted both drugs for off-label uses by targeting physicians who did not prescribe the drugs for approved uses; (2) promoted the drugs to treat conditions such as multiple sclerosis, ADHD, schizophrenia, and others; (3) set high benchmarks for sales representatives that required off-label marketing; (4) used programs and discussions to promote the drugs off-label; and (5) minimized safety risks of off-label uses. Cephalon also allegedly paid kickbacks to physicians who prescribed large amounts of the drugs, entered into a co-promotion conspiracy with Takeda Pharmaceuticals, and failed to report violations the CIA and attempted to mislead the OIG.

Analysis. In its motion to dismiss, Cephalon argued that the relators failed to show that Cephalon promoted the drugs off label, or that false claims involving these drugs were submitted to the government. According to 31 U.S.C. §3729(a)(1)(A), a claim must show that the defendant knowingly presented or caused to be presented to the U.S. a claim for payment that was false or fraudulent. The court noted that the complaint provides evidence that Cephalon’s representatives were instructed to use misleading evidence while marketing the drugs. The complaint also alleges that a particular doctor began prescribing dozens of Provigil prescriptions a month to treat depression, primarily to Medicare and Medicaid patients, after attending a Cephalon-sponsored presentation discussing off-label uses.

Cephalon argued that facts alleging a kickback scheme were insufficiently pleaded. In the complaint, relators provided details regarding physicians, events, and compensation in which kickbacks were involved in violation of the Anti-Kickback Statute (42 U.S.C. §1320a-7b). Cephalon argued that the allegations of a conspiracy claim failed to plead the underlying fraud with particularity. The complaint outlined facts surrounding a plan in which Takeda Pharmaceuticals would promote the drugs for off-label uses while Cephalon was under investigation. All of these claims were found to have been sufficiently pleaded and survived the motion to dismiss.

Other allegations claimed violations of state false claims acts in Delaware, New York, Georgia, New Jersey, Oklahoma, and Rhode Island. These claims were dismissed because the state acts did not apply retroactively. The relators also alleged that “reverse” false claims were made when Cephalon failed to report any instances of off-label promotion of the drugs, which was prohibited by the CIA. The response to the motion to dismiss argued that penalties would be incurred due to these failures to report, and therefore Cephalon avoided payments to the government by failing to self-report. Cephalon argued that the relators showed no violation of an obligation to pay the government, only a violation of an obligation to report. The court agreed with this analysis and dismissed this claim, without prejudice.

The case is Civil Action No. 08-287.

Attorneys: Eric D. Gill, U.S. Attorney's Office, for United States of America. Alan M. Freeman (Blank Rome LLP) for Bruce Boise. Alison Tanchyk (Morgan Lewis & Bokius LLP) for Cephalon, Inc.

Companies: Cephalon, Inc.; Takeda Pharmaceuticals

MainStory: TopStory FCANews AntikickbackNews BillingNews DrugBiologicNews PrescriptionDrugNews FraudNews PennsylvaniaNews

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