Drugmakers Genentech and OSI Pharmaceuticals have agreed to pay $67 million to settle a whistleblower lawsuit. It was alleged in the suit that the companies violated the False Claims Act (FCA) by making misleading statements about the effectiveness of cancer drug Tarceva. Federal prosecutors said the drug’s co-developers, Roche AG unit Genentech Inc. and Astellas Pharma Inc. subsidiary OSI Pharmaceuticals LLC, aggressively marketed their Tarceva drug to doctors and health care providers from January 2006 to December 2011. The drug companies lacked evidence the drug could effectively treat certain patients with non-small cell lung cancer. That was especially true as it related to those who didn’t have a mutation in their epidermal growth factor receptor or were smokers.
The settlement, if approved, would resolve claims brought by Brian Shields, a former Genentech employee, who filed the whistleblower suit in California federal court in 2011. He will receive approximately $10 million for filing the suit. A Genentech spokeswoman told Law360 that the government did not require a corporate integrity agreement from either company. It should be noted that the claims in question occurred before Astellas acquired OSI in 2010.
Genentech, located in South San Francisco, Calif., and OSI Pharmaceuticals, located in Farmingdale, N.Y., co-promote Tarceva, which is approved to treat certain patients with non-small cell lung cancer or pancreatic cancer. OSI Pharmaceuticals LLC is the successor to OSI Pharmaceuticals Inc., which was acquired by Astellas Holding US Inc. in 2010 and converted to a limited liability company in 2011. The Department of Justice has said it will hold those companies accountable that mislead the public about the efficacy of their products. In a statement, Benjamin C. Mizer, the head of the U.S. Department of Justice’s Civil Division, had this to say:
Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs.
As a result of the $67-million settlement, the federal government will receive $62.6 million and state Medicaid programs will receive $4.4 million. The Medicaid program is funded jointly by the state and federal governments. Shields will receive approximately $10 million.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.
The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $29.8 billion through False Claims Act cases, with more than $18.2 billion of that amount recovered in cases involving fraud against federal health care programs.
Genentech is facing FCA claims unsealed in May in New York federal court accusing the company and many others of unlawfully receiving government reimbursements for unapproved vaccines and other biologic drugs. The whistleblower suit alleges that Genentech, Amgen Inc., Bristol-Myers Squibb Co. and a host of other companies put patients at risk by conspiring with pharmacies and drug-packaging companies to repackage drugs with excess product in violation of approved labeling. The case is in the U.S. District Court for the Northern District of California.
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