Cephalon to Pay $425 Million to Settle Illegal Marketing Charges Involving Actiq, Provigil and GabitrilSep 30, 2008 | Parker Waichman LLP
Cephalon Inc. has reached a settlement with federal prosecutors over charges that the drug maker illegally marketed its narcotic painkiller Actiq, as well as two other drugs, Provigil and Gabitril. In addition to paying a fine of $425 million, Cephalon will plead guilty to a criminal misdemeanor for the illegal off-label marketing of its drug.
Actiq, sold as a lozenge on a stick, has been implicated in over 120 fatalities, including the deaths of two children who thought the drug was candy. Actiq contains fentanyl, a highly addictive opiate that is 80 times more potent than morphine. Fentanyl is considered a Class II substance by the Drug Enforcement Administration, meaning it is associated with a high potential for abuse and a risk for fatal overdose. While Actiq was only approved for treating pain in cancer patients, a November 2006 Wall Street Journal investigation found that 80-percent of patients taking Actiq did not have cancer.
Once a drug has been approved by the Food & Drug Administration (FDA), doctors are free to prescribe it as they see fit. However, drug companies are prohibited from advertising a drug’s off-label uses.
According to U.S. prosecutors, Cephalon marketed Actiq to doctors as a treatment for migraines and injuries. The company used lavish physician-education conferences and a compensation and bonus structure to encourage off-label use of Actiq. The company also had its sales people market Actiq to doctors who did not treat cancer patients. As a result of these illegal practices, sales of Actiq rose from $50 million in 2001 to $500 million in 2006.
Prosecutors said that Cephalon used the same tactics to illegally market the epilepsy drug Gabitril as a treatment for anxiety, insomnia and pain; and promoted the use of the narcolepsy medication Provigil for fatigue and other ailments.
The $425 million settlement includes a $375 million civil settlement, a $40 million criminal fine and $10 million in criminal forfeiture, prosecutors said. A share of the settlement - $46.5 million – will go to former Cephalon sales representatives who acted as whistleblowers and reported the company’s illegal marketing practices to authorities. Most of the settlement will be used to reimburse state Medicare plans. In addition to the fine, Cephalon will also pay more than $12 million in interest.
While the company has agreed to plea to a misdemeanor charge, prosecutors had considered levying a more serious felony charge against Cephalon. Prosecutors said they did not want a felony charge to hinder the company’s ability to sell the drugs to people who truly needed them.