BOSTON = Two pharmaceutical companies have agreed to pay more than $200,000 to the state’s Medicaid program (MassHealth) to settle allegations that they made misleading representations to physicians and other health care providers about the effectiveness of a lung cancer drug, Attorney General Maura Healey announced on June 10.
The payment is part of a national settlement in which the companies will pay more than $67 million to resolve allegations that these false claims caused state and federal reimbursement for use that was not approved by the U.S. Food and Drug Administration (FDA).
“Our office takes seriously its responsibility to safeguard the limited taxpayer dollars available for the medical treatment of residents in need,” said Healey, in a press release. “We expect health care corporations to put the health of patients first rather than engage in improper sales or marketing practices for their own profit.”
The companies are Genentech, a Delaware corporation with its principal place of business in California, and OSI Pharmaceuticals, Inc., which was a Delaware corporation with its principal place of business in New York. In June 2010, OSI was acquired by Astellas US Holding, Inc., and, in March 2011, was converted to a Delaware limited liability company, OSI Pharmaceuticals, LLC.
The companies manufactured, distributed, marketed and promoted Tarceva, which treats non-small cell lung cancer (NSCLC) by targeting epidermal growth factor receptors (EGFRs) in cancerous cells.
The national settlement resolves allegations that from 2006 through 2011, Genentech and OSI promoted Tarceva for unapproved uses by making false and misleading representations to physicians and other health care providers that it was effective to treat NSCLC in patients who were current or former smokers. There is little evidence to support Tarceva’s effectiveness in this patient population unless the patient presents with a specific gene mutation. The agreement also resolves allegations that the companies paid kickbacks to health care professionals as inducement to prescribe Tarceva.
Off-label prescribing of drugs by physicians is a common practice and is not unlawful, but the U.S. Food, Drug and Cosmetic Act prohibits pharmaceutical manufacturers from promoting off-label uses of their products.
Under the terms of the settlement, Genentech and OSI have agreed to pay more than $67 million to the United States and the states involved. The total Medicaid portion of the settlement (state and federal shares) is $8.71 million, of which MassHealth will recover $215,625.90. MassHealth is jointly funded by the Commonwealth and the federal government and pays for health care products and services for eligible low-income individuals, including people with disabilities, children and elder citizens.
The investigation into Genentech and OSI resulted from a whistleblower action filed in the United States District Court for the Northern District of California under the federal False Claims Act and various state false claims statutes. The settlement is the result of investigation, litigation, and settlement negotiations undertaken by the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of California, and a team of attorneys and data analysts from the offices of a number of state Attorneys General.
Assistant Attorney General Evelyn Tang of AG Healey’s Medicaid Fraud Division served on the national team representing the states. Other members of the state team included Assistant Attorneys General and data analysts from California, New York and Texas.