Drug maker Forest pleads guilty, will pay $313 million to settle unapproved and off-label drug case

by Ben Vernia | September 15th, 2010

On September 15, the Department of Justice announced that Forest Pharmaceuticals, Inc. (a subsidiary of Forest Laboratories, Inc.), has agreed to settle charges that it sold an unapproved drug and unlawfully promoted two others. According to DOJ’s press release:

Forest Pharmaceuticals Inc., a subsidiary of New York City-based Forest Laboratories Inc., has agreed to plead guilty to charges relating to obstruction of justice, the distribution of Levothroid, which at the time was an unapproved new drug, and the illegal promotion of Celexa for use in treating children and adolescents suffering from depression, the Justice Department announced today. The companies also agreed to settle pending False Claims Act allegations that Forest caused false claims to be submitted to federal health care programs for the drugs Levothroid, Celexa, and Lexapro. Forest has agreed to pay more than $313 million to resolve criminal and civil liability arising from these matters.

Forest Pharmaceuticals Inc. agreed to plead guilty to one criminal felony count of obstructing justice, one criminal misdemeanor count of distributing an unapproved drug in interstate commerce, and one criminal misdemeanor count of distributing a misbranded drug in interstate commerce. Under the plea agreement, Forest Pharmaceuticals will pay a criminal fine of $150 million and will forfeit an additional $14 million in assets. Forest Pharmaceuticals’ guilty plea and sentence is not final until accepted by the U.S. District Court. Forest also will pay over $149 million to resolve allegations under the False Claims Act, including a civil complaint filed by the United States in February 2009.

Under the Food, Drug and Cosmetic Act (FDCA), a manufacturer is required to submit a New Drug Application (NDA) to the Food and Drug Administration (FDA) and obtain the agency’s approval before distributing a “new drug” in interstate commerce. In this NDA, the manufacturer is required to set forth information concerning the manufacturing processes and composition of the drug, and provide sufficient data generated in adequate and well-controlled clinical investigations to demonstrate that the drug is safe and effective for its specified use. After the FDA approves the product as safe and effective for a specified use, any promotion by the manufacturer for other uses – known as “off label” uses – renders the product misbranded.

Today’s combined resolution concerns three drugs distributed by Forest: Levothroid, Celexa and Lexapro. Levothroid was an orally administered levothyroxine sodium drug used to treat hypothyroidism, a condition in which an individual has a thyroid deficiency. Celexa and Lexapro are anti-depressant drugs that, at the time period at issue, were approved only for use in treatment of adult depression.

In the criminal information, the government alleges that Forest Pharmaceuticals began distributing Levothroid in the early 1990s without first obtaining FDA approval. Orally administered levothyroxine sodium drugs had been on the market to treat hypothroidism since the 1950s, and manufacturers had introduced these drugs into the market without first obtaining FDA approval. In 1997, however, the FDA announced that these drugs were “new drugs” under the FDCA and needed the agency’s approval. Nonetheless, because the FDA deemed the drugs to be medically necessary, the manufacturers were given four years – until Aug. 14, 2001 – in which to conduct the necessary studies and obtain FDA approval. Later, in order to meet continuing patient demand, the FDA announced that, as a matter of enforcement discretion, the agency would permit manufacturers of unapproved levothyroxine sodium drugs to continue distributing their unapproved drugs after Aug. 14, 2001, on certain conditions. One of those conditions was that any manufacturer which had not obtained NDA approval for its levothyroxine sodium drug product needed to comply with a two-year, gradual distribution phase-down of its unapproved drug until it obtained FDA approval to distribute the drug.

According to the criminal charges, Forest Pharmaceuticals made a deliberate decision to continue distributing its unapproved Levothroid product in quantities far exceeding the amounts permitted by the FDA’s distribution phase-down plan. The charges further alleges that, on Aug. 7, 2003, the FDA sent a warning letter advising that Forest Pharmaceuticals was no longer entitled to distribute its unapproved Levothroid product because the company had made a deliberate decision not to comply with the FDA’s distribution phase-out plan. After receiving the warning letter, Forest Pharmaceuticals directed its employees at its St. Louis distribution center to work overtime until approximately 1:00 a.m. the following morning and, during that time, to continue shipping as much of its unapproved Levothroid as possible.

The criminal charges further allege that Forest Pharmaceuticals submitted inaccurate information to the FDA as part of its NDA submission for Levothroid and that Forest Pharmaceuticals obstructed an FDA regulatory inspection concerning the data submitted in the Levothroid NDA. Specifically, when FDA inspectors saw a portable humidifier at a 2003 inspection of a manufacturing plant in Cincinnati, certain company management personnel falsely advised the investigators that the portable humidifier was being stored in the room and had not been used for humidity control, when in fact it had been.

The company also has resolved civil False Claims Act allegations for its continued distribution of unapproved Levothroid after August 14, 2001, and for failing to advise the Centers for Medicare and Medicaid Services that the drug no longer qualified for coverage by government health care programs, thereby causing false claims to be submitted to those programs.

Forest Pharmaceuticals halted its commercial distribution of its unapproved version of Levothroid as of Aug. 9, 2003. Since the fall of 2003, Forest Pharmaceuticals has been commercially distributing a different orally administered levothyroxine sodium drug, also called Levothroid, in accordance with a supply agreement with Lloyd Pharmaceuticals. This resolution does not involve that product.

Regarding Celexa, the criminal information and the False Claims Act complaint filed by the United States allege that Forest Pharmaceuticals promoted the drug for unapproved pediatric use. Despite a limited approval only for adult depression, Forest Pharmaceuticals promoted Celexa for use in treating children and adolescents suffering from depression. The government alleges that Forest Pharmaceuticals publicized and circulated the positive results of a double-blind, placebo-controlled Forest study on the use of Celexa in adolescents while, at the same time, Forest Pharmaceuticals failed to discuss the negative results of a contemporaneous double-blind, placebo-controlled European study on the use of Celexa in adolescents.

The government further alleges that Forest Pharmaceuticals’ off-label promotion consisted of various sales techniques, including directing its sales representatives to promote pediatric use of Celexa in sales calls to physicians who treated children and adolescents, and hiring outside speakers to talk to pediatric specialists about the benefits of prescribing Celexa to children and teens.

The False Claims Act complaint also alleges that Forest engaged in such marketing conduct in connection with Lexapro, which, at that time, also lacked any approvals for pediatric use. The civil complaint further alleges that Forest used illegal kickbacks to induce physicians and others to prescribe Celexa and Lexapro. Kickbacks allegedly included cash payments disguised as grants or consulting fees, expensive meals and lavish entertainment. The civil complaint alleges that as a result of the foregoing conduct, Forest caused false claims to be submitted to federal health care programs.

Lexapro was approved for use for acute and maintenance treatment of Major Depressive Disorder in adolescents, 12 – 17 years of age, on March 19, 2009.

The settlement arose from three qui tam suits. The relators will share $14 million of the $60 million federal share of the civil settlement (a 23% relators’ share).

The government also announced that the parent corporation, Forest Laboratories, Inc., has agreed to a five-year Corporate Integrity Agreement. (Although Forest Pharmaceuticals, Inc., agreed to plead guilty to a felony count, the company’s inclusion in the CIA suggests that the OIG-HHS concluded that the charge – obstruction of justice – did not trigger mandatory exclusion.)

Leave a Reply

Recent Posts

Recent Comments