Cephalon will pay $425M

PHILADELPHIA — Drugmaker Cephalon Inc., completing a previously announced settlement, will pay $425 million for illegally marketing a highly addictive lollipop painkiller and two other drugs for nonapproved uses.

Federal prosecutors also announced Monday that Cephalon, as planned, will plead to a criminal misdemeanor for its off-label marketing.

"This company ... put patients at risk for nothing more than the bottom line," Acting U.S. Attorney Laurie Magid said at a news conference.

Doctors can prescribe drugs for uses other than what has been approved by the U.S. Food and Drug Administration, but pharmaceutical companies cannot promote such "off-label" use in their marketing.

One of Cephalon's drugs, Actiq, was marketed to doctors for maladies including migraines and injuries when the fentanyl lollipop is a highly addictive narcotic approved only for cancer patients with severe pain, authorities said.

Cephalon, which has a manufacturing facility in Salt Lake City, encouraged off-label marketing at lavish physician-education conferences and through its compensation and bonus structure, authorities said. The company also had its sales force call on doctors who would not normally prescribe the three drugs, they said.

The off-label use proved harmful and even fatal at times, Magid said. However, the settlement does not encompass any individual cases.

Cephalon disclosed the tentative settlement last November. The Frazer-based company has signed an agreement to plead guilty to one misdemeanor count of distribution of misbranded drugs.

Cephalon also marketed Gabitril, an anti-epilepsy drug, for anxiety, insomnia and pain, authorities said. Provigil, which is approved for narcolepsy, was marketed for fatigue, among other things, they said.

The $425 million settlement includes a $375 million civil settlement, a $40 million criminal fine and $10 million in criminal forfeiture, prosecutors said.

Whistleblowers — former Cephalon sales representatives disturbed by the company's practices — will share $46.5 million from the settlement.

Much of the money recovered will be shared by state and federal Medicaid programs that paid the tab for many of the prescriptions. Sales of Actiq soared from $50 million to $500 million from 2001 to 2006, authorities said.

Prosecutors considered charging the company with a felony, but agreed to a misdemeanor in part to preserve the company's ability to sell the drugs to patients who need them, Magid said.

"We are pleased to have these long-standing matters behind us, while preserving our ability to participate in all federal and state health care programs, thereby maintaining the access of patients in those programs to our medications," Jerry Pappert, Cephalon's executive vice president and general counsel, said in a statement Monday.

Cephalon will also pay an estimated $12 million in interest.