Attorney General Gansler Enters into Agreement with Cephalon
Pharmaceutical Company To Pay $425 Million For Off-Label Drug Marketing

BALTIMORE, MD (November 5, 2008)-Maryland Attorney General Douglas F. Gansler announced today that Maryland has joined an agreement negotiated by the National Association of Medicaid Fraud Control Units and the U.S. Department of Justice with pharmaceutical manufacturer, Cephalon, Inc., to settle allegations of improper off-label marketing of three pharmaceutical drugs. As a result, Cephalon will pay the states and the federal government $375 million in damages and penalties to Medicaid and other federal health care programs. Additionally, the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a one-count Information in federal court alleging a misdemeanor violation of the Food, Drug, and Cosmetic Act. In a plea agreement with the U.S. Attorney’s Office, Cephalon has agreed to pay $50 million to resolve this charge. As a result of the settlement, the Maryland Medicaid program will receive $1,758,493.

“This case is a perfect example of how cooperation between federal and state law enforcement agencies can lead to the end of illegal practices that are costing Medicaid and other federal health care programs hundreds of millions of dollars,” states Attorney General Gansler. “I applaud the efforts of all the entities involved and would like to reassure the public that our efforts in stopping such activity are ongoing.”

The national federal and state settlement totaling $425 million dollars resolves allegations that Cephalon engaged in a scheme to promote the drugs Provigil, Gabitril and Actiq for uses not approved by the Food and Drug Administration (“FDA”), called “off-label” uses:

Provigil: Although FDA-approved to treat only narcolepsy and sleep disorders, Cephalon marketed Provigil for many other uses including to treat sleepiness, tiredness, decreased activity, lack of energy, fatigue, depression, schizophrenia, multiple sclerosis, Parkinson’s disease and ADHD.

Gabitril: Although FDA-approved only as a partial treatment for seizures, Cephalon marketed Gabitril as a remedy for anxiety, insomnia and pain. Following reports of seizures in patients taking Gabitril who did not have epilepsy, the FDA required Cephalon to send a warning to physicians advising them of the risks of seizures in connection with off-label Gabitril use.

Actiq: Although FDA-approved only to treat opioid-tolerant cancer patients (or those patients for whom morphine-based painkillers are no longer effective), Cephalon marketed Actiq, an opioid with a risk of addiction and abuse, to general practitioners and internists for injuries and conditions including migraines, sickle-cell pain crises, injuries, and in anticipation of changing wound dressing or radiation therapy.

Although it is legal for physicians to prescribe drugs for off-label uses, it is illegal for pharmaceutical manufacturers to promote off-label uses. Cephalon’s off-label marketing campaign included: (1) having a publication strategy that subsidized the production and dissemination of reports favorable to off-label uses, knowing that they had no scientific value; (2) having a sales program that provided incentives to sales staff to promote off-label uses; and (3) rewarding high prescribing doctors with grants, speakerships and preceptorships. In addition, Cephalon sponsored Continuing Medical Education (“CME”) programs to fund expensive vacations for physicians and disseminated off-label promotional literature to physicians at these CMEs. Cephalon’s improper off-label marketing of these three drugs and the company’s payment of illegal remuneration to physicians to induce them to prescribe these drugs resulted in losses to the state Medicaid programs.

This settlement reimburses the federal government and the participating states for excessive amounts paid by the Medicaid program as a result of Cephalon’s improper off-label marketing campaign. Additionally, Cephalon entered into a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of the Inspector General, requiring strict scrutiny of its future marketing and sales practices.

A team from the National Association of Medicaid Fraud Control Units participated in the investigation and represented the interests of the states during negotiations with Cephalon, Inc. Team members included representatives from South Carolina, New Jersey, Ohio, Oregon and Virginia. The Maryland Medicaid Fraud Control Unit, which is in the Attorney General’s Office, assisted in the settlement of the claims of the Maryland Medicaid program.