Celgene has agreed to pay $280 million to settle “whistleblower” allegations by a former company sales representative that it promoted cancer treatments Thalomid® (thalidomide) and Revlimid® (lenalidomide) for off-label uses not covered by federal healthcare programs.

Without admitting to any wrongdoing, Celgene said it has reached agreement on a civil settlement with the former sales rep, Beverly Brown, as well as the U.S. Department of Justice, 28 states, the District of Columbia, and the city of Chicago.

The biotech giant said in a statement that it agreed to settle “to avoid the uncertainty, distraction, and expense of protracted litigation.”

Celgene agreed to pay $259.3 million to the U.S., and $20.7 million to the 28 states and the District of Columbia. California will receive the most of any state, $4.7 million. Celgene is expected to pay the settlement today, the Justice Department said in a separate statement.

“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” Acting U.S. Attorney Sandra R. Brown stated.

The settlement includes a final resolution of allegations Brown made concerning Thalomid and Revlimid. Brown sued Celgene in 2010, alleging that the company violated the federal False Claims Act by carrying out off-label marketing of the two drugs that resulted in prescriptions that were submitted for claims under Medicare and state-run Medicaid programs.

Thalidomide was initially marketed for treating morning sickness, and subsequently banned in the 1960s due to its role in causing birth defects. Celgene acquired rights to the drug in 1992, and six years later won FDA approval to market the rebranded drug as Thalidomid, a treatment for a leprosy-related rare skin disorder erythema nodosum leprosum, with restrictions barring its use by pregnant women.

In 2006, Thalidomid was also approved by the FDA in the first of what are now several multiple myeloma indications. Brown contended that Celgene promoted Thalidomid as a treatment for cancer years before that approval was granted.

A derivative of thalidomide, Revlimid, was first approved by the FDA December 27, 2005, for patients with transfusion-dependent anemia due to low or intermediate-1-risk myelodysplastic syndromes associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities.

The agency has since approved additional indications for Revlimid. The drug is now approved for multiple myeloma, in combination with dexamethasone; multiple myeloma, as a maintenance therapy following autologous hematopoietic stem cell transplantation; transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes associated with a deletion 5q abnormality with or without additional cytogenetic abnormalities; and mantle cell lymphoma in patients whose disease has relapsed or progressed after two prior therapies, one of which included bortezomib.

Best-Selling Drug

Revlimid is Celgene’s best-selling drug, generating $6.974 billion in sales last year, 20% above 2015—and another 20% year-over-year jump in the first quarter, rising to $1.884 billion. The company has attributed the sales jumps to increases in treatment duration and new patients.

Revlimid ranked No. 6 in GEN’s list of Top 15 Best-Selling Drugs of 2016.

Sales of Thalidomid slumped 18% last year, to $152.1 million. In the first quarter, Celgene combined its reporting of Thalidomid with two other drugs in a category called “Other,” which dipped to $224 million from $226 million in Q1 2016.

Before the parties reached a settlement in United States ex rel. Brown v. Celgene Corp., CV10-3165, the Court granted a Celgene motion for summary judgment that dismissed allegations that Celgene illegally paid doctors to induce them to promote and/or prescribe Thalomid and Revlimid.

Celgene has argued in its defense that Thalomid and Revlimid are medical breakthrough medicines that have benefitted patients with serious illnesses, that physicians prescribed these medicines based on their independent medical judgment, and that Celgene’s relationships with physicians have been appropriate, and have helped to advance patient care and science.

Celgene has also noted that it is not required to enter into a Corporate Integrity Agreement as part of the settlement, unlike many drug developers that settle False Claims Act cases.

Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery.

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