Attorney General's News Release

September 30, 2008

Nixon will recover $3.8 million in Medicaid fraud case against Pennsylvania pharmaceutical company

Jefferson City, Mo. - Attorney General Jay Nixon today said his Medicaid Fraud Control Unit will recover more than $3.8 million for taxpayers under an agreement with a Pennsylvania pharmaceutical company that marketed three of its drugs for uses not approved by the Food and Drug Administration and rewarded some doctors who frequently prescribed the drugs. As a result of the scheme, Nixon said, the three drugs made by Cephalon Inc. were prescribed more often than they normally would have been, and Medicaid programs in Missouri and the other states paid too much in reimbursement for the drugs.

Under an agreement in principle that resolves allegations of off-label marketing, Cephalon will pay a total of $375 million in damages and penalties to Missouri, the federal government and the 49 other states. The company also agreed to plead guilty to a criminal charge in federal court in Pennsylvania and pay a $50 million criminal fine. Nixon said the Missouri share of the settlement is $3,813,757. With this recovery, Nixon's Medicaid Fraud Control Unit will have recovered more than $120 million for taxpayers in Medicaid fraud cases.

"Working in concert with the Attorneys General of other states and with the federal government has enabled us to ensure that Missouri taxpayers are not shortchanged by fraudulent practices," Nixon said. "This case was another example of stopping fraud and abuse against Medicaid and taxpayers."

Cephalon, based in West Chester, Penn., engaged in the off-label marketing of these drugs:

• Actiq, approved by the FDA to treat severe pain from cancer. Cephalon marketed the highly addictive narcotic beyond oncologists to general practitioners and internists.
• Gabitril, approved as an anti-epileptic drug to treat seizures. Cephalon marketed it for conditions including depression, anxiety, Tourette's syndrome and chronic pain. Patients who were not suffering from seizures subsequently experienced seizures as a result of taking the drug to treat other conditions.
• Provigil, approved to treat narcolepsy and sleep disorders. Cephalon marketed it for a wide variety of other conditions including fatigue, depression, multiple sclerosis, schizophrenia, Parkinson's disease, chronic fatigue syndrome, anxiety, neuropathic pain, and attention deficit/hyperactivity disorder in children. Provigil became one of Cephalon's best-selling drugs.

Cephalon's off-label marketing campaign included subsidizing the production and dissemination of reports favorable to off-label uses, having a sale program with incentives to sales staff to promote off-label uses, and rewarding high-prescribing doctors with grants, speakerships and perceptorships. Cephalon also sponsored Continuing Medical Education (CME) programs to fund expensive vacations for physicians, and disseminated off-label promotional literature to physicians at these CMEs.

In addition, Cephalon has entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General, to ensure its compliance in the future.

The Missouri case was brought by the Attorney General's Medicaid Fraud Control Unit, which Nixon established in 1994. The unit has authority under state law to investigate and prosecute, both civilly and criminally, allegations of fraud against Missouri's Medicaid program.