For Immediate Release - December 16, 2010

Attorney General Martha Coakley's Office Recovers $1.7 Million for Massachusetts Medicaid Program in Investigation of Pharmaceutical Manufacturers Elan and Eisai

BOSTON - Massachusetts Attorney General Martha Coakley's Office has reached agreements with pharmaceutical manufacturers Elan Corporation, PLC and Eisai, Inc. to resolve allegations that the two companies engaged in improper marketing of the epilepsy drug Zonegran. Under the terms of the settlements, the companies will pay $1.7 million - $1.34 million from Elan and $364,000 from Eisai - to the Massachusetts Medicaid Program, which provides funds for health care products and services to eligible low-income individuals, including elder citizens, children and people with disabilities.

"Our office continues to work in collaboration with our colleagues in federal and state law enforcement nationwide to hold pharmaceutical manufacturers accountable for improper sales and marketing conduct," Attorney General Coakley said. "Today's settlements demonstrate our continuing commitment to put a stop to off-label marketing practices that result in the prescribing of unapproved drugs to our most vulnerable citizens."

The Massachusetts recovery is part of a national settlement that will return more than $100 million to Medicaid programs nationwide and an additional $12.3 million to other federal health care programs. Attorney General Coakley's office took a leading role in negotiating these agreements, working in cooperation with the United States Attorney's Office for the District of Massachusetts, the United States Department of Justice, the Office of Inspector General of the U.S. Department of Health and Human Services and the attorneys general of Michigan, New Hampshire and Ohio.

Elan developed the anti-epileptic drug Zonegran and introduced it to the United States market following U.S. Food and Drug Administration (FDA) approval of the product for the treatment of seizures in 2000. Eisai acquired the North American interests in Zonegran from Elan in April of 2004. The investigation arose from a whistleblower complaint filed in federal court in Boston, which alleged that both companies engaged in a scheme to improperly market Zonegran for uses that were not approved by the FDA, and that this improper marketing caused the submission of false claims to Medicaid programs nationwide and to other federally-funded health care programs.

Off-label prescribing of pharmaceutical products by physicians is a common practice and is not unlawful, but the U.S. Food, Drug and Cosmetic Act (FDCA) prohibits pharmaceutical manufacturers from marketing off-label uses of their products. The government's investigation focused on allegations that Elan engaged in promotional activities designed to increase the prescribing of Zonegran by pediatric neurologists, although the drug had not been approved for the treatment of patients under the age of 16. In addition, the government investigation addressed claims that Elan promoted Zonegran for such unapproved uses as the treatment of neuropathic pain, obesity, headaches, and a variety of psychiatric conditions. The settlements also resolve allegations that Elan offered and paid illegal compensation to health care professionals to induce them to promote and prescribe Zonegran in violation of federal and state anti-kickback statutes.

Eisai took on Elan's Zonegran sales force when it acquired the marketing rights to the product in 2004. After the transfer, Eisai took steps to eliminate marketing activities that might tend to promote the off-label marketing of Zonegran, and re-trained its sales and marketing staff to address these issues.

In addition to the Elan civil settlements, the company's U.S. subsidiary EPI has agreed to plead guilty to a federal misdemeanor violation of the FDCA, on charges that the company's improper promotional activities resulted in the misbranding of Zonegran. The Elan civil settlement agreements are contingent upon the U.S. District Court's acceptance of the plea. If the guilty plea is accepted by the court, Elan will pay an additional $102 million in criminal fines to the federal government. Elan has also agreed to the terms of a detailed and comprehensive Corporate Integrity Agreement (CIA) to be administered by the Office of Inspector General of the U.S. Department of Health and Human Services, under which its sales and marketing practices going forward will be strictly monitored.

Attorney General Coakley's Medicaid Fraud Division works to prevent and prosecute provider fraud and violations of state law in the administration of the Medicaid program.

Assistant Attorney General Robert Patten of AG Coakley's Medicaid Fraud Division served as lead negotiator on behalf of the states in this national settlement. He was assisted by Assistant Attorney General George Zachos and Data Analyst Anthony Megathlin, both also of the Medicaid Fraud Division, and by Assistant Attorneys General and data analysts from Michigan, New Hampshire and Ohio.

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