Par Pharmaceuticals Pleads Guilty to Civil & Criminal Allegations of Off-Label Marketing

Par Pharmaceuticals recently pled guilty in federal court to charges of off-label marketing and will be forced to pay $45 million in order to resolve the company’s criminal and civil liability. Par allegedly promoted its prescription drug, Megace ES, for off-label uses that were not approved as safe or effective by the Food and Drug Administration (“FDA”) and uses not covered by federal healthcare programs.

U.S. Magistrate Judge Madeline Cox Arleo fined Par $18 million and ordered $4.5 million in criminal forfeiture. Par will also pay $22.5 million to resolve their civil liability in the case.

“The FDA requires drug makers to go through a stringent approval process before new drugs – or new uses for existing drugs – are made available to doctors and their patients,” U.S. Attorney Paul J. Fishman said. “Today, Par admitted that it chose to ignore that process in pursuit of more sales and greater profits. It is paying the price for its choice.”

“Individual accountability of Par’s board and executives is required under the comprehensive five-year integrity agreement OIG has with the company,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “For example, company executives may have to forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales representatives may not be paid incentive compensation for the drug involved in the case, or successor branded versions of that drug.”

The Off-Label Charges

Par pled guilty to a criminal misdemeanor for misbranding the medication Megace® ES in violation of the Federal Food, Drug, and Cosmetic Act (“FDCA”). Megace ES was originally approved by the FDA to treat anorexia, cachexia, or other significant weight loss suffered by patients with AIDS.

The FDCA requires companies like Par to specify the intended use of each product when applying to the FDA. Once a drug is approved, it cannot be distributed via interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for any new intended uses.

By distributing Megace ES across the nation and promoting it for off-label use in treating non-AIDS-related geriatric wasting , the drug was considered to be criminally misbranded because the use was never approved by the FDA and the drug’s FDA-approved labeling lacked sufficient instructions.

Details of the Case

Federal officials allege that Par knowingly and improperly targeted Megace ES sales to elderly nursing home residents experiencing weight loss, whether or not the patient suffered from AIDS.  Par then launched a long-term care sales team to market the drug off-label to this population.

During the off-label marketing campaign, Par was aware of the adverse side effects associated with the use of Megace ES in elderly patients. These adverse effects include an increased risk of deep vein thrombosis, toxic reactions in those elderly patients with impaired kidney function and death.

The Justice Department also alleges that Par made unfounded and misleading claims about the superiority of Megace ES over generic megestrol acetate for elderly patients in order to encourage physicians to switch patients from their generic megestrol acetate to Megace ES. This was despite the fact that Par had conducted no well-controlled studies to support the claims of greater efficacy for Megace ES.

The Outcome for Par

According to the terms of the plea agreement and corporate integrity agreement (CIA), Par must implement changes in the way the company does business. They must also provide annual reports to the U.S. Attorney’s Office with sworn certification from its chief executive officer that the company has not illegally marketed any pharmaceutical products. The pharmaceutical company is additionally prohibited from providing compensation to sales representatives or their managers based on the volume of sale for Megace ES, and in the CIA, based on the volume of Megace ES and any branded successor megestrol acetate drug.

Under the CIA, Par is also required to change its executive compensation program to permit the company to recoup annual bonuses from covered executives if they, or their subordinates, engage in significant misconduct.

As part of the resolution, the case whistleblowers, known only as McKeen and Combs, will receive $4.4 million.

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