GlaxoSmithKline Pays $3 Billion Health Care Fraud Settlement. In July 2012, GlaxoSmithKline ("GSK") agreed to pay $3 billion to resolve criminal and civil issues relating to its promotional and reporting practices. GSK pleaded guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about Avandia to the Food and Drug Administration ("FDA"). GSK will pay a criminal fine of $956 million and forfeit $43 million. In addition, the company will pay $2 billion to resolve allegations related to civil liability under the False Claims Act ("FCA"). The FCA allegations include: promoting various drugs for off-label use, making false statements concerning the safety of Avandia, and reporting false prices. According to the Department of Justice ("DOJ"), the $3 billion in total penalties represents the largest health care fraud settlement in U.S. history. GSK also entered into a five-year corporate integrity agreement ("CIA") with the Department of Health and Human Services ("HHS") Office of Inspector General ("OIG"). For more, see here.
Janssen Pharmaceuticals Enters into Consent Decree with States and Settles Consumer Protection Claims. On August 30, 2012, Janssen Pharmaceuticals (a Johnson & Johnson company) announced that it had reached a settlement with 36 states and the District of Columbia over allegations related to promotional and marketing practices for Risperdal. The company will pay approximately $181 million to resolve claims based on state consumer protection laws. In addition, the company has entered into a Stipulated General Judgment that contains specific compliance provisions relating to the company's distribution of medical information. Specifically, the consent decree states: "Janssen Scientifically Trained Personnel shall be responsible for the identification, selection, approval and dissemination of Reprints Containing Off-Label Information regarding Atypical Antipsychotics. Neither Janssen Sales nor Janssen Marketing personnel shall disseminate these materials, unless Janssen has a pending filing with FDA for approval of the new indication described in the Reprint." The restriction placed on the dissemination of reprints is more stringent than available FDA guidance and implies support for FDA's position that off label promotion does not have First Amendment protection as argued in several recent cases. The consent decree also provides that only Janssen "Scientifically Trained Personnel" may respond in writing to an unsolicited request for off-label information regarding an atypical antipsychotic. "Scientifically Trained Personnel" is defined as "personnel who are highly trained experts with specialized scientific and medical knowledge, usually with an advanced scientific degree (e.g., an MD, PhD, or PharmD), whose roles involve the provision of specialized, medical or scientific information, scientific analysis and/or scientific information to health care professionals and includes Regional Medical Research Specialists, but excludes anyone performing sales, marketing, promotional ride alongs, or other commercial roles." Separately, Johnson & Johnson disclosed that it has reached an agreement in principle with DOJ regarding civil FCA matters related to sales and marketing practices, rebates, and payments for Risperdal and other drugs. Some industry experts estimate that the settlement of those matters may involve payments of approximately $2 billion. For more, see here and here.
D.C. Circuit Rules that Discretionary Exclusion Period Under Responsible Corporate Officer Doctrine Must Be Supported by Substantial Evidence. In July 2012, the U.S. Court of Appeals for the D.C. Circuit ruled on the appeal filed by three former Purdue Frederick Co. executives regarding their 12-year exclusion imposed by the Secretary of HHS. While the court noted that the Secretary does have authority to impose an exclusion, it remanded on the ground that the duration of the exclusion was not supported by an adequate "reasoned explanation." More specifically, reviewing the agency determination under the "arbitrary and capricious" standard, the court observed that 42 U.S.C. § 1320a-7(b)(1)(A) "authorizes exclusion of an individual whose conviction was for conduct factually related to fraud," but took issue with the agency's reliance on precedents that did not involve the type of exclusion at issue (i.e., discretionary exclusions based on misdemeanor), but instead arose out of mandatory exclusions for felony convictions. Concluding that the precedents cited by the Secretary did not justify the Purdue executives' 12-year exclusion, the court was nevertheless careful not to opine as to whether the 12-year period might be justified; the agency will have an opportunity to present its justification to the district court on remand. For more, see here.
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