Par Pleads Guilty in Off-Label Case, Will Pay $45 Million

Par Pharmaceutical Cos., the generic-drug maker, pleaded guilty to marketing its AIDS drug Megace ES illegally and agreed to pay $45 million to resolve criminal and civil investigations.

In entering the plea today in federal court in Newark, New Jersey, Chief Executive Officer Paul Campanelli admitted Par sold Megace ES for uses not approved by the U.S. Food and Drug Administration. While the FDA approved the drug for treatment of anorexia and unexplained weight loss in AIDS patients, Par actively promoted it for so-called off-label uses, he said.

Par admitted promoting Megace ES for older patients without AIDS, and its sales staff falsely said the drug was more effective than other products. Par will pay $22.5 million in the criminal case and the same amount to settle civil claims that it falsely billed Medicare and Medicaid. The FDA imposes a long approval process for new drugs or new uses of medicines.

“Par admitted it chose to ignore that process in pursuit of more sales and greater profits,” U.S. Attorney Paul Fishman said at a news conference in Newark. “The conduct was wrong and went on for a long period of time. People didn’t say, ‘Wait, let’s stop.’”

Drugmakers have paid billions of dollars in fines and penalties for off-label marketing in the past decade. U.S. law allows doctors to prescribe drugs for any reason, while companies can only market them for approved uses.

TPG Capital

Par, which was acquired last year by TPG Capital for $1.9 billion, pleaded guilty to a misdemeanor charge of misbranding Megace ES in violation of the Food, Drug and Cosmetic Act.

“To maximize sales, Par promoted the use of Megace ES for the treatment of non-AIDS-related geriatric wasting,” according to a charging document known as a criminal information. “Members of the Par sales force knew that they were calling on very few nursing homes that actually had AIDS patients.”

Par signed a five-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. It requires “enhanced accountability, increased transparency, and wide-ranging monitoring activities” by both internal and external reviewers, according to Fishman.

Par also settled three lawsuits filed by whistle-blowers under the False Claims Act. The law allows citizens to sue on behalf of the government and share in any recovery. Two of the whistle-blowers will get $4.4 million.

‘Off-Label Insanity’

Their attorney, Timothy McInnis, said in a statement that Par’s marketing of Megace ES to hospice physicians represented “the ultimate in off-label insanity.”

“Patients are admitted to hospices when their conditions are terminal, where medical staff helps them die in peace and dignity,” McInnis said. “Par, instead, saw them as an opportunity for easy money.”

A predecessor to Par’s drug, Megace OS, was sold by Bristol-Myers Squibb Co. from 1993 until 2001, prosecutors said. In 2001, the FDA approved five generic versions of that drug. Par relied on the Megace OS safety and effectiveness data in obtaining FDA approval for Megace ES for AIDS patients.

Par requested an FDA meeting to discuss seeking approval for non-AIDS geriatric patients, and it never formally applied or conducted drug trials among that group, Fishman said. Par then targeted geriatric patients without AIDS for treatment of anorexia and unexplained sudden weight loss, Campanelli said.

Patient Data

Par falsely claimed that Megace ES was more effective than Megace OS, Campanelli said. The company also obtained confidential patient data protected by a 1996 federal law so that it could identify people who could be switched to Megace ES, he said.

Par carried out the marketing strategy by “asking prescribers to convert all of their geriatric patients from Megace OS to Megace ES, while knowing that many of those patients did not have AIDS,” Campanelli admitted.

One whistle-blower, Christine Thompson, was a regional business manager who was “repeatedly rebuffed” in voicing concerns internally about the off-label marketing scheme, according to her attorneys, Brian Kenney and Tavy Deming.

Par ignored patient safety because “there was little profit to be made by marketing the drug lawfully, due to advancements in HIV and AIDS treatments which drastically reduced the on-label patient population,” according to a statement by the lawyers.

Free Speech

Par sued the U.S. government in 2011, claiming the FDA violates drugmakers’ rights under the U.S. Constitution’s First Amendment, which guarantees free speech, by making it a crime for manufacturers to discuss unapproved uses of approved drugs. As part of the settlement, Par dropped that case, Fishman said.

“What the First Amendment does not protect is saying these things that are not true,” Fishman said.

The criminal case is U.S. v. Par Pharmaceutical Cos., U.S. District Court, District of New Jersey (Newark). The civil cases, all filed in U.S. District Court, District of New Jersey, are U.S. ex rel. McKeen and Combs v. Par Pharmaceutical; U.S. ex rel. Elliott & Lundstrom v. Bristol-Myers Squibb, Par Pharmaceutical; and U.S. ex rel. Thompson v. Par Pharmaceutical.

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

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

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