Celgene Settles Lawsuit Over Improper Promotion of Cancer Drugs

Drugmaker Celgene Corp. agreed to pay $280 million to the U.S. and many state governments to settle a former sales manager's lawsuit accusing the company of improperly promoting two cancer drugs and causing false reimbursement claims to be submitted to federal and state health-insurance programs.

Celgene, of Summit, N.J., didn't admit liability in the settlement and said Tuesday it denies any wrongdoing. The company said it settled the case to avoid the uncertainty and expense of protracted litigation.

The settlement stems from a lawsuit initially filed in 2010 in federal court in Los Angeles by former Celgene sales manager Beverly Brown, alleging the company marketed the drugs Thalomid and Revlimid to treat multiple types of cancer for which the drugs weren't approved by the U.S. Food and Drug Administration, such as cancers of the brain and breast.

Doctors are allowed to prescribe drugs for uses not approved by the FDA, a practice known as off-label prescribing. But the FDA has generally prohibited companies from marketing their drugs for off-label uses.

The FDA initially approved Thalomid to treat leprosy in 1998. In 2006, the FDA approved widening Thalomid's uses to include treatment of the blood cancer multiple myeloma.

The FDA initially approved Revlimid in 2005 to treat a blood disorder but later expanded the approved uses to include treating multiple myeloma. Global sales of Revlimid have surged, to $6.97 billion last year, or more than 60% of total company revenue.

In her lawsuit, Ms. Brown alleged her superiors at Celgene instructed her and other sales employees to promote to doctors various off-label uses of the drugs, and that she was rewarded for it in her compensation. The lawsuit alleged the marketing activities caused doctors to write prescriptions for the drugs that government health programs such as Medicare shouldn't have paid for, but did.

"This case was about the marketing of dangerous drugs being driven by Wall Street promises and not medical necessity," said Ms. Brown's attorney, Reuben Guttman.

Ms. Brown filed her lawsuit under the False Claims Act on behalf of the U.S. and many state governments. The False Claims Act allows people bringing such lawsuits to receive up to 30% of any monetary recoveries, to encourage people with knowledge of suspected fraud to come forward. The Justice Department has the option to intervene and take the lead in such lawsuits, but in this case it didn't intervene. Instead, it monitored the case, the U.S. Attorney's Office for the Central District of California said in a press release.

Mr. Guttman said he expects Ms. Brown to receive 25% to 30% of the settlement amount, but said he didn't yet know the exact amount.

Celgene will pay $259.3 million to the federal government and $20.7 million to be split among 28 states and the District of Columbia.

Celgene said that before it reached the settlement, a federal judge had dismissed part of the case, including allegations that Celgene illegally paid doctors to induce them to prescribe Thalomid and Revlimid.

Write to Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

July 25, 2017 18:36 ET (22:36 GMT)