Off-label marketing offenses cost Elan $203 million

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Elan Pharmaceuticals pleaded guilty today to a misdemeanor violation for illegally promoting epilepsy drug Zonegran. The firm was also sentenced to pay a criminal fine of $97 million and forfeit $3.6 million in substituted assets, and agreed to pay $102 million to resolve civil allegations.

According to the Department of Justice, Elan promoted Zonegran for a variety of uses that were not on the label, including in children, psychiatric disorders, headaches, weight loss and Parkinson's disease. Sales aids were used to hype those benefits, the government said.

The guilty plea and penalties came two months after the Boston company agreed to enter into a corporate integrity agreement with the Office of Inspector General and settled a whistleblower lawsuit filed in 2004 under the False Claims Act by a Massachusetts physician, who will receive more than $10 million from the federal share of the civil recovery.

Elan sold Zonegran to Eisai in 2004 for $128.5 million, and Eisai is also paying $11 million to settle civil claims.

Zonegran launched in 2000 into a crowded field and had only 1% of the market in its first year. About two years later, and facing “financial difficulties,” Elan developed a series of sales campaigns to bolster revenue by touting the drug for unapproved uses, the DOJ alleged. It armed reps with sales aids that used graphics to highlight multiple mechanisms of action and trained them to use these materials in a way that would “[o]pen doors for psychiatry, pain, headache, etc.”

One of the exhibits in the case was a 2003 training guide disseminated to reps with a comparison flash card designed to go “head-to-head” with a rival drug. This drug, described only as Drug T, was well-known to be used for chronic and migraine headaches, the DOJ noted in a statement. The training guide explained that: “[t]his hard hitting tool is going to help you take share from Drug T and this primer is going to show you how!"

The flashcard should “never” be left behind, Elan instructed its sales force, and reps should “use it until they [the FDA] pull it.”

According to the criminal charge, the firm also sent letters to pediatricians describing how to administer Zonegran to children and sent physicians on expense-paid trips to hear speeches on off-label uses. Following these measures, prosecutors said, Zonegran sales “increased dramatically.” An 80% rise from August 2001 to August 2002 was followed by an 87% spike in 2003.

The Elan settlement was part of a broader effort by the Justice Department to combat healthcare fraud using the False Claims Act. The DOJ said total recoveries in False Claims Act cases since January 2009 have topped $5.4 billion.

"We will continue to seek this kind of criminal resolution when pharmaceutical companies undermine the drug approval process by promoting drugs for uses not approved by the FDA as safe and effective," said acting special agent in charge Antoinette Henry of FDA's Office of Criminal Investigations.

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