Endo Health Solutions has agreed to pay nearly $193 million in civil and criminal penalties to settle claims with the federal government and several states over the illegal marketing of the pain patch Lidoderm.
Lidoderm is only approved by the Food and Drug Administration to treat post-herpetic neuralgia, a painful condition caused by shingles. Three whistleblower lawsuits were filed against Endo for its “off label” promotion of the patch to treat lower back pain, diabetic neuropathy and carpal tunnel syndrome between 1999 and 2007.
Under terms of the settlement, Endo (NASDAQ: ENDP) and its subsidiary Endo Pharmaceuticals Inc. will pay $172 million in penalties and a criminal fine of $20.8 million. The whistleblowers’ share of the settlement has not been determined.
“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use.”
As a part of the settlement, Endo entered into a deferred prosecution agreement with the Department of Justice for a period of up to 2 ½ years and a corporate integrity agreement with the Department of Health and Human Services for a period of five years.
“The Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.
“Illegally marketing drugs off-label puts patient lives at risk and rips off New York taxpayers and the state by defrauding Medicaid and other programs,” said New York Attorney General Eric T. Schneiderman, whose office led a team of states in the investigation and subsequent settlement with Endo.
“Pharmaceutical companies, no matter how large, are not above the law, and my office will continue to ensure that prescriptions are written based on sound medical judgment – and that drug manufacturers are held responsible for pushing their products for uses not approved by the FDA,” said Schneiderman.
A 30-day supply of Lidoderm patches can cost as much as $300. Endo’s off-label promotion caused healthcare providers to submit false reimbursement claims for non-covered uses to Medicare, Medicaid and other federal health care programs.
According to prosecutors, Endo sales managers instructed sales representatives to expand their Lidoderm sales conversations with doctors beyond just using the patch to treat post-herpetic neuralgia. They were also encouraged to promote Lidoderm in workers’ compensation clinics.
The whistleblower lawsuits were filed by Peggy Ryan, a former Lidoderm sales representative, Max Weathersby, another former Lidoderm sales representative and Gursheel S. Dhillon, a physician.
“The company takes its responsibility to patients, healthcare providers and our shareholders very seriously,” said Endo’s president and CEO, Rajiv De Silva.
“We are pleased to resolve this matter and are confident that we have robust programs in place to assist us in satisfying our legal and regulatory agreements. We are committed to a company culture that supports the conduct of our business in a compliant and ethical manner.”