Celgene to Pay $280 Million to Settle Fraud Suit Over Cancer Drugs

The pharmaceutical company Celgene has agreed to pay $280 million to settle claims that it marketed the cancer drugs Thalomid and Revlimid for unapproved uses, the company said on Tuesday.

Under the terms of the settlement, which resulted from a lawsuit filed by a whistle-blower — a former sales representative at Celgene — the company will pay $259.3 million to the United States and $20.7 million to 28 states and the District of Columbia.

The Celgene settlement is the latest in a string of multimillion-dollar fines that pharmaceutical companies have paid to settle charges that they inappropriately marketed certain drugs in recent years, but this case is one of the largest settlements to involve a cancer drug, said Reuben A. Guttman, who represented the whistle-blower, Beverly Brown.

Cancer drugs are seen as more difficult to pursue in so-called off-label marketing cases in part because oncologists often prescribe drugs for unapproved uses in an effort to combat a deadly and still mysterious disease.
“The company got the idea that it could be fast and loose with what it was saying about its drug because it was selling to cancer patients who might be in need,” Mr. Guttman said. “At the end of the day, what this is about is that even when you’re on life’s edge,” he added, a company “can’t break the law by off-label marketing a drug.”

Brian Gill, a spokesman for Celgene, which is based in New Jersey, said in a statement on Tuesday that the company denied any wrongdoing and said it was “settling to avoid the uncertainty, distraction, and expense of protracted litigation.”

He noted that, before the settlement, a federal judge had dismissed a portion of the case that claimed that Celgene had illegally paid doctors to induce them to prescribe Thalomid and Revlimid, and he said that the company stood by the significance of its drugs, which he described as “breakthrough medicines.”

By 2016, Revlimid, which was closely related to Thalomid, was Celgene’s leading product, bringing in nearly $7 billion in sales. Thalomid’s sales in 2016 totaled $152 million, according to the company. The company’s shares were down 1 percent at the close of the stock market on Tuesday.

The settlement is the most recent chapter in the story of thalidomide, the notorious drug that was developed by a German company and marketed around the world in the 1950s as a sedative and anti-nausea treatment. In the 1960s, following discoveries that the drug caused horrific birth defects, thalidomide was pulled from pharmacy shelves worldwide. Although the drug was not approved in the United States, the thalidomide crisis led to the overhaul of the nation’s drug-approval process, including the requirement that companies prove a drug is not just safe but also effective.

In 1998, the Food and Drug Administration approved it for use in patients with a complication of leprosy, albeit with severe restrictions intended to prevent it from getting into the hands of pregnant women. Celgene called it Thalomid. Even though it was approved for a rare condition, many in the medical community expressed hope it could soon be used to treat a broader range of conditions, from cancer to autoimmune diseases and AIDS, according to news reports.
Sales of Thalomid quickly took off, in part because — as Ms. Brown claimed in her complaint — Celgene “flooded the country” with sales representatives who were under heavy pressure to pitch the drug to oncologists for a variety of cancers. The F.D.A. sent Celgene two warning letters, in 1998 and 2000, claiming the company had been marketing the drug to treat cancer. In 2000, one Wall Street analyst estimated that 90 percent of Thalomid’s sales were to treat cancer, according to Ms. Brown’s complaint.

Doctors have leeway in deciding which drugs to prescribe, but pharmaceutical companies are supposed to promote their products only for uses that are approved by the F.D.A.

Celgene did not gain approval to market Thalomid as a cancer treatment until 2006, when the F.D.A. cleared it to promote the drug for multiple myeloma.

In 2005, even before Thalomid received its approval for use in cancer patients, it was Celgene’s leading product, bringing in $387.8 million in net sales, according to the company’s financial statements.

Also in 2005, the company received approval to sell Revlimid for a rare cancer, and Ms. Brown’s complaint claims that the company — as it had with Thalomid — marketed it to treat a broader range of cancers. It also pressured doctors to switch Thalomid patients to Revlimid, which is more expensive.

Ms. Brown’s complaint also claimed that Celgene’s inappropriate marketing of Thalomid exposed patients to heightened risks that included potentially fatal blood clots and other side effects. Those risks were added to the drug’s warning label only after it received the approval for cancer treatment, Mr. Guttman said.
The settlement was reached after federal prosecutors declined to intervene in the case, although they continued to monitor it. Under the federal False Claims Act, private citizens like Ms. Brown can bring a suit against companies in the United States and share in any recovery. The amount of her reward has not yet been determined, Mr. Guttman said.
Celgene is expected to pay the settlement on Wednesday, the Justice Department said.
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