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Relator’s Case Alleging Kickbacks and Off-Label Promotion by Cephalon Inc. Allowed to Go Forward

Yellow-and-Red-PillsA federal judge in Pennsylvania has allowed the majority of a relator’s False Claims Act case against Cephalon Inc. to proceed, alleging a kickback scheme involving off-label drug marketing. Treanda is a chemotherapy drug that was approved by the U.S. Food and Drug Administration (“FDA”) in October 2008 as a treatment for indolent non-Hodgkins lymphoma (“iNHL”). It was approved as a second-line treatment—the FDA approved it only for patients whose cancer progressed after treatment with another regimen. As early as December 2007, Cephalon allegedly promoted Treanda off-label for front-line, rather than second-line, treatment of iNHL, a use not approved by the FDA. Accordingly, this off-label promotion resulted in the submission of false claims for reimbursement from government health programs. Cephalon also allegedly illegally paid kickbacks to physicians in order to further its off-label promotion scheme, conspired with physicians to further its off-label promotion scheme, violated its obligations to the government under its Corporate Integrity Agreement, and retaliated against relator Matthew Cestra for investigating and reporting his concerns regarding Cephalon’s conduct. Cephalon was subsequently acquired by Teva Pharmaceutical Industries Ltd. in 2011.

Cestra is alleging that the off-label prescription of Treanda for front-line treatment of iNHL is not reimbursable under government health programs. Whether a use is covered under the programs generally depends on whether medical items or services are reasonable and necessary. Whether prescribing a drug for a particular condition is reasonable and necessary is typically determined by considering whether the drug is prescribed for a “medically accepted indication” that is reimbursable under Medicare and Medicaid. In turn, whether an indication is medically accepted is determined either by FDA approval or by any of several pharmaceutical reference books known as “compendia”. The federal government generally will not pay for medications prescribed for purposes not approved by the FDA or not supported by compendia.

Cestra is alleging that Cephalon used a German clinical study (“the Rummel study”) to promote Treanda off-label even though it knew that the Rummel study was deeply flawed and would be contradicted by Cephalon’s own clinical study (“the BRIGHT study”). The BRIGHT study, while purportedly intended to help Cephalon pursue FDA approval of Treanda for front-line treatment of iNHL, was inadequate for that purpose and instead was meant to “preserve the illusion of Cephalon’s confidence in the Rummel study” and justify continued off-label promotion of Treanda. On February 22, 2011, Cestra allegedly attended a planning meeting where Cephalon’s senior management agreed to deceive the market regarding the drug’s effectiveness as a front-line treatment for iNHL. More specifically, the company allegedly carried out its off-label marketing scheme through sales force presentations and meetings, continuing medical education programs, speaker programs, advisory boards through which Cephalon allegedly paid physicians $4,000 per day to allow Cephalon to promote Treanda to them for off-label use, market studies, specifically a study questionnaire and three studies, that were allegedly used to promote the Rummel study to oncologists, false and misleading minimization of safety risks associated with using Treanda off-label and filing for FDA approval for front-line use of Treanda as a ruse to continue off-label promotion.

Cephalon’s “Treanda Brand Review” slide decks from July 2010 allegedly state that Cephalon’s advisory boards alone generated $5 million that year in new, off-label sales of Treanda. In 2010, Cephalon Oncology allegedly estimated its In-Practice Programs for physicians, through which Treanda was allegedly promoted off-label and Cephalon allegedly paid kickbacks, yielded a 12:1 return on investment of $420,000 per program. The company also allegedly spent over $3 million per year to provide reimbursement support to doctors and office managers submitting claims to government programs.

In 2008, Cephalon entered into a Corporate Integrity Agreement with the Office of the Inspector General (“OIG”) of the Department of Health and Human Services. By failing to report its alleged off-label promotion and payment of illegal kickbacks, Cestra claims that Cephalon engaged in a deliberate plan to knowingly submit false reports to the OIG—as required pursuant to the terms of the Corporate Integrity Agreement—that either materially misrepresented the facts concerning its illegal conduct or concealed such conduct altogether. Cephalon also allegedly avoided its obligations under the Corporate Integrity Agreement by manipulating internal audits. Finally, Cestra contends that Cephalon retaliated against him on two occasions when he internally reported allegedly illegal promotional activities and kickback schemes to Cephalon’s compliance department. He was allegedly locked out of meetings he had previously attended and was effectively forced to resign because of his internal reporting.