Pharmacy Company Astellas to Pay $7.3 Million in False Claims Act Settlement

The Department of Justice, in concert with several states’ attorneys general, recently announced a settlement against Astellas Pharma U.S., Inc., based in Northbrook, Illinois. The case involved substantial allegations of off-label marketing practices aimed at pediatric federal healthcare patients. As you well know, it is considered a violation of the False Claims Act – a federal law mimicked by several state statutes – to submit a claim for reimbursement for any prescription drug marketed for use to treat causes not expressly approved by the FDA. Under the FCA damages provisions, defendants facing this type of allegation could pay triple damages for each instance of fraud.

Off-Label Marketing and the False Claims Act

When a drug company wishes to introduce a new type of medicine to the consumer marketplace, it must submit to rigorous testing procedures as implemented by the FDA. These tests are designed to identify and isolate potential problems with the drug, as well as prohibit unreasonably dangerous drugs from entering the market. Once a drug is tested, it is given a specific approval for the treatment of certain conditions in certain patients. Marketing a drug for use in a group of patients (e.g., children) not specifically listed in the FDA’s approval is considered “off-label marketing.”

The False Claims Act applies to off-label marketing directed at patients receiving federal healthcare coverage (i.e., Medicare, Medicaid, or Tricare). Under the law, any claims for reimbursement for prescription drugs used by patients for an unapproved use is considered a false claim against the government and is punishable by significant civil penalties.

Claims Against Astellas

The Astellas settlement involved allegations of off-label marketing spanning from 2005 to 2010. According to the DOJ, Astellas was knowingly and intentionally marketing its anti-fungal drug Mycamine for use by children despite the fact the FDA did not approve Mycamine for pediatric use until 2013. Mycamine is a powerful anti-fungal drug used to reduce and prevent the spread of severe or systemic fungal Candida (yeast) infections in the bloodstream, abdomen, or esophagus. The drug is also used to treat the spread of fungal infections in stem cell transplant patients.

“The FDA’s drug approval process requires companies to demonstrate the safety and efficacy of their products,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Justice Department will hold accountable pharmaceutical companies that skirt these rules and seek to bill federal healthcare programs for uses of drugs that are not reimbursable.”

The whistleblower in this case, former pharmaceutical sales representative Frank Smith, will recover $708,852. The federal government settled the claims for $4.2 million and several state Medicaid programs are splitting $3.1 million.

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