Consumer Fraud

Astellas Pharma settles whistleblower lawsuit for $7.3 million

osha whistle Astellas Pharma settles whistleblower lawsuit for $7.3 millionAstellas Pharma US Inc., which manufactures and sells pharmaceutical drugs, agreed to pay $7.3 million to the federal government to resolve claims it violated the False Claims Act. The drugmaker was charged with marketing and promoting the drug Mycamine for pediatric use, for which it did not have U.S. Food and Drug Administration (FDA) approval. The drug was therefore not eligible for reimbursement through federal health care programs. The federal government will receive $4.2 million of the settlement, and state Medicaid programs will receive $3.1 million.

Mycamine is used to treat fungal infections of the esophagus in adults. The FDA also approved the use of Mycamine to treat adult patients with serious and invasive infections caused by the fungus Candida, and to prevent Candida infection in adult patients undergoing stem cell transplant.

Plaintiffs in the whistleblower lawsuit said betweem 2005 and 2010 Astellas knowingly marketed and promoted the sale of the drug for pediatric use. However, the drug was never approved for any pediatric use.

The whistleblower lawsuit was filed by Frank Smith, a former Astellas sales representative, under the False Claims Act qui tam provisions, which allows an individual to file a lawsuit on behalf of the government if they have knowledge of wrongdoing. Under the qui tam provisions, the whistleblower is eligible to receive a portion of any money the government may recover. In this case, Smith will receive $708,852.

The complaint was filed in 2010 in the U.S. District Court for the Eastern District of Pennsylvania. Stephen Sheller, founder of Sheller P.C., represented Smith along with Claudine Homolash, formerly of the Sheller firm, and Joseph Trautwein.

U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger said, “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.”

The government created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009 as a joint effort between the Justice Department and the Department of Health and Human Services. The cooperative effort works to reduce and prevent Medicare and Medicaid financial fraud. Since its creation, the Justice Department has recovered close to $20 billion through False Claims Act cases. Nearly $14 billion of that total was recovered in relation to fraud in federal health care programs.

U.S. Justice Department
The Legal Intelligencer