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July 25, 2014 Healthcare Fraud

Pharmaceutical Company Astellas Settles False Claims Act Allegations With States

In an all-too-familiar scenario, pharmaceutical company Astellas, Inc. has agreed to settle all allegations against it involving the anti-fungal medication Mycamine. Earlier this year, the U.S. Department of Justice announced that it had reached an agreement with the company wherein it would remit over $7 million to the government pursuant to a whistleblower lawsuit filed by a former employee. Earlier this month, several states have reached similar deals with the corporation, which is alleged to have unlawfully marketed its products in violation of FDA regulations.

Basics of Claims Against Astellas

Astellas is a large, Japan-based pharmaceutical company annually producing billions of dollars’ worth of prescription medications and medical devices. According to the allegations raised by a courageous whistleblower who was willing to come forward against the company, Astellas routinely and consistently marketed its drug Mycamine for use in pediatric patients– a use for which it was not approved. Under federal laws, any patient receiving government healthcare benefits (e.g., Medicaid) may only receive drugs that are approved for use by the FDA for the precise condition or medical issue affecting the patient. If a drug is administered to an unapproved patient or for an unapproved purpose, subsequent billing of the federal government for reimbursement is considered a fraudulent false claim, thereby triggering False Claims Act liability.

Astellas was specifically alleged to have, between 2005 and 2010, marketed its powerful anti-fungal drug for use in pediatric patients suffering from extensive post-surgical Candida fungal infections. The drug was only approved by the FDA to treat this type of infection in adults; therefore, Astellas was in violation of FDA regulations by encouraging providers to use the drug in children.

Settlement With Government

The federal government settled with Astellas for $7.3 million, of which the whistleblower received a little more than $702,000. As you are likely aware, Medicaid programs are administered by states in concert with the federal government. Therefore, this type of fraud involving pediatric Medicaid patients quickly became a state issue too, prompting many states’ attorneys general to get on board in holding Astellas responsible.

Later on, Kentucky announced it had finally reached a settlement with the drug company totaling nearly $40,000. This amount may pale in comparison to the amounts recovered by the federal government; however, keep in mind Astellas’ products are distributed across the country, exposing it to liability nationwide.

According to a statement released in April 2014 by the U.S. Department of Justice:

“The settlement in this case further demonstrates our commitment to hold responsible any pharmaceutical company that disregards the FDA drug approval process and promotes drugs for uses before they have been deemed safe and effective… It’s a message that should resonate with all drug companies: there are consequences for violating the False Claims Act and putting profit ahead of government safeguards.”

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