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Insight & Intelligence™ : Jan 27, 2014

Top 10 Biggest Biopharma Marketing Fines: 2014 Edition

Making false claims about your products not only doesn’t pay—it can cost you a lot of money.

When biopharma companies try to market a drug for an indication it hasn’t been approved for, lawsuits happen—and very expensive fines. Just how expensive can they get? Here is an update of our list of the top 10 largest fines levied against pharmaceutical and biotech companies that marketed drugs for illegal off-label uses, either alone or in addition to other charges—such as wrongfully seeking federal reimbursement for their medications through programs like Medicaid and Medicare.

#10. Serono (now Merck Serono)

Amount of fine: $704 million

Drug(s) involved: Serostim [somatropin (rDNA origin) for injection]—2012 sales figure unavailable

Date penalty approved and/or announced: October 17, 2005

Details of the admissions and resulting penalties: Serono (now Merck Serono) pleaded guilty to charges that its Serono Laboratories unit conspired with medical device manufacturer RJL Sciences to market FDA-unapproved bioelectrical impedance analysis computer software packages for calculating body cell mass and diagnosing HIV/AIDS wasting, to increase the market for Serostim by increasing the market for the devices/software. Serono Labs agreed to pay a $136.9 million criminal fine, and its affiliate companies, a total $567 million to settle civil liabilities that it knowingly submitted false and fraudulent claims ineligible for reimbursement because the claims covered off-label use of Serostim, and were for prescriptions induced by kickbacks.

Of the civil settlement, $305 million plus interest went to the U.S. for losses suffered by the federal portion of the Medicaid program, the Veteran’s Administration, the Department of Defense and the Federal Employees Health Benefits program; and nearly $262 million plus interest to the states toward reimbursing their Medicaid programs.

#9. Amgen

Amount of fine: $762.1 million

Drug(s) involved: Aranesp (darbepoetin alfa)—$2.040 billion in 2012 sales
Enbrel (etanercept)—$4.236 billion in 2012 sales
Neulasta (pegfilgrastim)—$4.092 billion in 2012 sales

Date penalty approved and/or announced: December 19, 2012

Details of the admissions and resulting penalties: Amgen admitted to illegally introducing a misbranded drug into interstate commerce by promoting off-label use of Aranesp for anemia caused by cancer. In the single largest criminal and civil fraud settlement involving a biotechnology company in U.S. history, Amgen agreed to pay a criminal fine of $136 million, forfeit $14 million, and pay a $612.1 million civil fine—$587.2 million to the federal government, $24.8 million to the states—to resolve claims that it caused false claims to be submitted to Medicare, Medicaid, and other government health care programs.

#8. TAP Pharmaceutical Products1

Amount of fine: $875 million

Drug(s) involved: Lupron (leuprolide)—About $800 million in 2012 sales2

Date penalty approved and/or announced: October 3, 2001

Details of the admissions and resulting penalties: TAP pleaded guilty and agreed to pay criminal charges and civil liabilities in connection with fraudulent drug pricing and marketing of the prostate cancer drug Lupron. TAP also agreed to settle federal civil False Claims Act liabilities and pay the federal government $559,483,560 for filing false and fraudulent claims with the Medicare and Medicaid programs as a result of TAP's fraudulent drug pricing schemes and sales and marketing misconduct.

TAP agreed to settle civil liabilities to the 50 states and the District of Columbia and to pay them $25,516,440 for filing false and fraudulent claims with the states stemming from TAP's drug pricing and marketing misconduct, and failure to provide state Medicaid programs with its best price for those drugs as required by law. TAP also agreed to comply with a new corporate integrity agreement.

#7. Merck & Co.

Amount of fine: $950 million

Drug(s) involved: Vioxx (rofecoxib)—Withdrawn from the market in September 2004

Date penalty approved and/or announced: November 22, 2011

Details of the admissions and resulting penalties: Merck pleaded guilty to introducing a misbranded drug into interstate commerce by promoting Vioxx for treating rheumatoid arthritis, before that use was approved by FDA. Merck was sentenced to pay a $321.636 million criminal fine, and agreed pay a $628.364 million civil settlement to resolve allegations regarding off-label marketing of Vioxx, and false statements about the drug’s cardiovascular safety. Of the total civil settlement, $426.389 million will be recovered by the federal government, and the remaining $201.975 will be distributed to participating Medicaid states.

#6. Johnson & Johnson

Amount of fine: $1.2 billion3,4

Drug(s) involved: Risperdal (risperidone)—$1.425 billion in 2012 sales

Date penalty approved and/or announced: April 11, 2012

Details of the admissions and resulting penalties: Johnson & Johnson and its Janssen Pharmaceuticals subsidiary are appealing in Arkansas Supreme Court the $1.2 billion judgment they were ordered to pay the Arkansas Medicaid fund by Pulaski County (AR) Circuit Judge Tim Fox, after a jury convicted the companies of almost 240,000 violations of the state’s Medicaid law—namely, that they defrauded Medicaid by failing to properly outline the antipsychotic drug’s risks, which include diabetes, hormonal changes that affect the sexual development of children, increased likelihood of strokes in elderly people and excessive weight gain in users of all ages.

The companies were also convicted of deceptively marketing the drug as safer, and thus better, than competing medicines. Arkansas Medicaid paid for 238,874 prescriptions—each of which, the state argued, was a violation of Medicaid fraud laws. J&J countered that the number of claims by the state should be 1,319.

#5. Eli Lilly

Amount of fine: $1.415 billion

Drug(s) involved: Zyprexa (olanzapine)—$1.701 billion in 2012 sales

Date penalty approved and/or announced: January 15, 2009

Details of the admissions and resulting penalties: Lilly pleaded guilty to a misdemeanor criminal charge of off-label marketing of the drug as a treatment for dementia, including Alzheimer’s dementia, in elderly people. Lilly agreed to pay a criminal fine of $515 million, the largest fine imposed to that date in a healthcare case, and the largest criminal fine for an individual corporation ever imposed to that date in a U.S. criminal prosecution of any kind. Lilly also agreed to forfeit $100 million, and pay up to $800 million in a civil settlement with the federal government and the states to resolve civil allegations that its off-label marketing caused false claims for payment to be submitted to federal insurance programs such as Medicaid, TRICARE, and the Federal Employee Health Benefits Program.

#4. Abbott Laboratories

Amount of fine: $1.6 billion

Drug(s) involved: Depakote (divalproex sodium)—2012 sales figure unavailable

Date penalty approved and/or announced: October 2, 2012

Details of the admissions and resulting penalties: Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote by marketing the drug off-label to treat behavioral disturbances in dementia patients from January 1998 to December 2006, and schizophrenia from January 2002 to December 2006. Abbott was ordered to pay the second-largest fine for the marketing of an individual drug, including a $500 million criminal fine, forfeit $198.5 million, and pay $1.5 million to the Virginia Medicaid Fraud Control Unit. The company also agreed to pay $100 million to resolve state consumer-protection claims and $800 million to the federal government and the states to resolve civil claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government healthcare programs.

#3. Johnson & Johnson

Amount of fine: $2.2 billion

Drug(s) involved: Risperdal (risperidone)—$1.425 billion in 2012 sales
Invega—$550 million in 2012 sales
Natrecor—2012 sales figure unavailable

Date penalty approved and/or announced: November 4, 2013

Details of the admissions and resulting penalties: Johnson & Johnson and subsidiaries Janssen Pharmaceuticals and Scios agreed to pay $485 million in criminal penalties and $1.72 billion in civil settlements with the federal government and several states, all to resolve criminal and civil charges relating to the prescription drugs Risperdal, Invega, and Natrecor. Janssen pleaded guilty and will pay $400 million in criminal penalties—a $334 million criminal fine and forfeiture of $66 million—for introducing Risperdal as a misbranded drug into interstate commerce, plus $1.273 billion in a civil settlement, under an agreement overseen by the U.S. District Court for the Eastern District of Pennsylvania. Janssen and J&J also agreed to new corporate integrity requirements.

J&J and Janssen also agreed to pay $149 million to settle DoJ claims that they paid millions of dollars in kickbacks intended to promote use of Risperdal and other J&J drugs in nursing homes by Omnicare and its consultant pharmacists. J&J and Janssen were also cited for off-label marketing of antipsychotic drug Invega, approved only for schizophrenia and schizoaffective disorder, and for making false and misleading statements about its safety and efficacy.

J&J and Scios agreed to pay the federal government $184 million to resolve civil charges that they caused submission of false and fraudulent claims to federal health care programs for heart failure drug Natrecor.

#2. Pfizer

Amount of fine: $2.3 billion

Drug(s) involved: Lyrica (pregabalin)—$4.158 billion in 2012 sales
Zyvox (linezolid)—$1.345 billion in 2012 sales
Bextra—2012 sales figure unavailable
Geodon (also marketed as Zeldox; ziprasidone)—2012 sales figure unavailable

Date penalty approved and/or announced: September 2, 2009

Details of the admissions and resulting penalties: Pfizer’s Pharmacia & Upjohn subsidiary pleaded guilty to a felony violation of the Food, Drug, and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. In addition, Pfizer agreed to pay a criminal fine of $1.195 billion, the largest U.S. criminal fine ever imposed to that date. Pharmacia & Upjohn also agreed to forfeit $105 million, for a total criminal resolution of $1.3 billion. Pfizer agreed to pay $1 billion to resolve allegations that the company illegally promoted the drugs, and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The federal share of the civil settlement was $668,514,830 and the state Medicaid share, $331,485,170.

#1. GlaxoSmithKline

Amount of fine: $3 billion

Drug(s) involved: Advair (fluticasone/salmeterol)—$8.3 billion in 2012 sales5
Flovent (fluticasone)—About $1.3 billion in 2012 sales5
Lamictal (lamotrigine)—About $1 billion in 2012 sales5
Paxil (paroxetine)—$615.4 million in 2012 sales5
Valtrex (valacyclovir)—$413.9 million in 2012 sales5
Imitrex (sumatriptan)—$312.1 million in 2012 sales5
Wellbutrin (bupropion)—$138.2 million in 2012 sales5
Avandia (rosiglitazone)—$9.9 million in 2012 sales5
Zofran (ondansetron)—2012 sales figure not available

Date penalty approved and/or announced: July 2, 2012

Details of the admissions and resulting penalties: GSK pleaded guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce, and one count of failing to report safety data about Avandia to FDA. GSK also agreed to pay $1 billion consisting of a criminal fine of $956,814,400 and forfeiture of $43,185,600; as well as a $2 billion civil settlement resolving claims for (1) promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, noncovered uses and paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex; (2) making false and misleading statements concerning the safety of Avandia; and (3) reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.