Off-Label Marketing Whistleblower Lawsuit Settles for $280 Million

Celgene agreed to pay $280 million to settle a False Claims Act lawsuit brought in California accusing it of promoting two cancer drugs for unapproved uses. Pharmaceutical companies may only promote drugs for their FDA-approved indications even though doctors may legitimately prescribe them for off-label purposes. The False Claims Act authorizes whistleblowers to seek recovery (on behalf of the government) of the money it was improperly billed as a result of the improper marketing.

This whistleblower lawsuit was a declined case. After the United States investigated the allegations, it decided not to intervene. In an intervened FCA, the United States files its own complaint and takes charge of the conduct of the litigation. In a declined FCA, the whistleblower has the option to prosecute it on behalf of the government. In a declined FCA, the relator (as the whistleblower is known) is entitled to between 25 and 30 percent of the recovery from the lawsuit.

The vast majority of False Claims Act recoveries used to be from intervened cases. Now, more declined cases are being taken to settlement or trial. In 2015, there was a record settlement of $495 million in a declined case against DaVita Healthcare Partners. That year, there was also a $663 million verdict (subsequently appealed) against a guardrail manufacturer in a declined case.

The Celgene lawsuit involved two blockbuster drugs, Thalomid and Revlimid. Last year, Revlimid sales generated nearly $7 billion in revenue for Celgene.
Celgene denied wrongdoing and said that it settled the matter to avoid the “uncertainty, distraction, and expense of protracted litigation.”

Off-label marketing has been a controversial area for False Claims Act lawsuits in the past few years. In 2012, the Court of Appeals for the Second Circuit reversed the conviction of a sales representative selling a drug for unapproved uses, contending that it violated freedom of speech. Later, Amarin sued the FDA for a declaratory judgment that it could make certain truthful and non-misleading statements about off-label uses for its drug Vascepa. The Amarin lawsuit settled in 2016.