Amgen Plea Deal Accepted by Judge in Aranesp Misbranding

A federal judge accepted Amgen Inc. (AMGN)’s plea agreement on a charge that it misbranded its anemia drug Aranesp, putting to rest a five-year probe of the company’s marketing practices.

U.S. District Judge Sterling Johnson in Brooklyn, New York, signed off today on the agreement with prosecutors, which will cost the company $150 million in criminal penalties. Amgen will also pay $612 million to settle civil claims by states and whistle-blowers alleging the company also illegally marketed other drugs.

The company’s guilty plea and resolution of civil cases “demonstrate our vigilance in protecting American’s health-care consumers and pursuing any corporation that seeks to profit by violating U.S. law,” Marshall L. Miller, head of the criminal division for the Brooklyn U.S. Attorney’s office, said in a statement.

Prosecutors alleged the company promoted Aranesp for uses not approved by the U.S. Food and Drug Administration from about 2001 through March 2007 to compete with Johnson & Johnson (JNJ)’s anemia treatment, Procrit. The company pleaded guilty yesterday to a single misdemeanor misbranding charge over the allegations.

Amgen, based in Thousand Oaks, California, was estimated to have reaped about $85 million in gains from misbranding Aranesp, Assistant U.S. Attorney Roger Burlingame said during today’s hearing.

Aranesp Revenue

U.S. revenue from Aranesp totaled more than $11 billion from 2001 through 2008, with about $6 billion coming from health-care programs Medicaid and Medicare, according to a complaint in a lawsuit unsealed today that was filed by a former Amgen employee.

Pharmaceutical companies aren’t permitted to market drugs for uses not approved by the FDA. Doctors may write prescriptions for off-label purposes as they see fit.

In lawsuits unsealed today, whistle-blowers alleged the company engaged in illegal promotion of other drugs including psoriasis medication Enbrel and Neulasta, a drug used to increase white blood cells in patients receiving chemotherapy. Plaintiffs in some of the suits alleged Amgen paid kickbacks to doctors who prescribed the drugs for off-label uses.

Two of the whistle-blowers, former Amgen sales representatives Elena Ferrante and Marc Engelman, alleged they were directed by management to promote Enbrel for mild psoriasis even though it had been approved only for more severe forms of the skin condition, New Jersey lawyer Lydia Cotz, who is representing the whistle-blowers, said in a phone interview.

Records Reviewed

The sales reps were also instructed to cull patients’ medical records and give the information to Amgen in violation of the Health Insurance Portability and Accountability Act, she said.

“They resisted these type of illegal marketing tactics and they were both retaliated against,” Cotz said of Ferrante and Engelman. Ferrante was terminated in August 2005 and Engelman was terminated in April 2007, Cotz said.

Another whistle-blower, former Amgen marketing representative Jill Osiecki, gathered evidence for federal investigators after reporting her concerns to the government about the company’s marketing practices in August 2004, according to her attorneys, Brian Kenney and Tavy Deming. Osiecki made secret recordings at 13 sales and marketing meetings for the company, according to her attorneys.

‘Personal Risk’

“We know of the many hundreds of hours she devoted at personal risk to advance this investigation and her years of hiding in plain sight as the government investigated all the Amgen allegations,” Deming said in a statement.

As part of the guilty plea and civil settlements, Amgen agreed to sign a corporate integrity agreement under which it must regularly report to the government on its compliance with drug marketing regulations, according to prosecutors.

Regarding the whistle-blower claims, Amgen spokeswoman Ashleigh Koss said in an interview today that the company doesn’t discuss personnel issues involving specific employees.

Yesterday, Johnson declined to accept Amgen’s plea to the criminal charge of misbranding Aranesp, saying it was a “very important case” and the plea deal had been “dumped” on him. He also declined to rule during the hearing today, waiting until the afternoon to issue his decision.

The case is U.S. v. Amgen Inc., 1:12-cr-00760, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Christie Smythe in New York at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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