Attorney General Announces Cephalon Settlement

DENVER – Colorado Attorney General John Suthers today announced that the State of Colorado will receive more than $1.2 million as part of a nationwide settlement with pharmaceutical manufacturer Cephalon, Inc. The monies will be used to reimburse the State Medicaid system.

Cephalon, Inc. is the manufacturer of the drugs Provigil (treats narcolepsy and sleep disorders), Gabitril (treats seizures), and Actiq (treats opioid-tolerant cancer patients). The states accused Cephalon of marketing and promoting its products for “off-label” uses not approved by the United States Food and Drug Administration. For example, Cephalon allegedly promoted the seizure drug Gabitril as a remedy for anxiety, insomnia, and general pain.

While physicians are generally free to prescribe FDA-approved drugs for off-label uses, drug manufacturers are not permitted to directly promote or market their drugs for such uses, with very few exceptions. Moreover, Colorado and other Medicaid programs usually do not pay for prescriptions for off-label purposes.

As part of the settlement, Frazer, Pennsylvania-based Cephalon will pay the federal government and numerous states $375 million to settle four whistleblower lawsuits alleging Medicaid and Medicare fraud from the sales and marketing of the three drugs between 2001 and 2006. Cephalon has also agreed to plead guilty in a Pennsylvania federal court to a criminal charge involving off-label marketing and pay a $50 million fine.

The State of Colorado pays over $3.2 billion each year for the medical care of 393,000 qualified Medicaid recipients.

The Colorado Attorney General’s Medicaid Fraud Control Unit facilitated Colorado’s portion of the settlement. In addition to the monetary recovery, Cephalon entered into a Corporate Integrity Agreement with the federal government to ensure that it will market, sell, and promote its products in accordance with all Federal healthcare program requirements.

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