Celgene Corp. to pay $280M to settle cancer drug fraud suit

LOS ANGELES — A New Jersey pharmaceutical company has agreed to pay $280 million to settle a federal lawsuit alleging it committed fraud by promoting a drug for leprosy and another therapy for unapproved cancer treatments, federal prosecutors announced Tuesday.

The agreement settled claims made in Los Angeles federal court by a former sales manager who said Celgene submitted false claims to Medicare and health care programs in 28 states and Washington, D.C., which were all parties to the settlement.

Beverly Brown had worked as an “immunology specialist” who was trained to aggressively promote Thalomid and Revlimid drugs for cancer treatments that had not been approved by the Food and Drug Administration.

Thalomid, another name for thalidomide, a drug prescribed for morning sickness in the 1950s and 1960s that caused severe birth defects, was approved in 1998 for treating about a fraction of the few hundred leprosy cases diagnosed in the U.S. each year, according to court filings. Revlimid is derived from thalidomide and was a successor to the earlier drug.

While the two drugs were later approved for limited cancer treatments, the company promoted them widely to doctors for multiple kinds of cancer years in advance of approvals, the lawsuit said.

The lawsuit claimed Celgene used false and misleading statements and paid kickbacks to doctors to prescribe the drugs.

A judge threw out the kickbacks allegation, but allowed the lawsuit to move forward.

Celgene denied wrongdoing and settled to avoid uncertainty, distraction and expensive litigation, the company said in a statement.

Brown, who brought the case in 2010 on behalf of the U.S. government under a federal whistleblower law, could receive 25 per cent to 30 per cent of the settlement — as much as $84 million.

“I’m extremely pleased to have been a part of recouping this amount of money for the taxpayer and for seeing our courageous client Beverly Brown vindicated in pursuing this matter,” her lawyer, Thomas Bienert, said.

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