Amgen's anemia drug Aranesp is shown in 2007. Federal prosecutors… (JB Reed, Bloomberg News )
Biotech giant Amgen Inc. pleaded guilty in federal court to improper marketing of its anemia drug Aranesp and has agreed to pay $762 million in criminal fines and civil settlements to resolve complaints from company whistle-blowers.
Federal prosecutors in New York said the Thousand Oaks company was "pursuing profits at the risk of patient safety" by encouraging doctors to use its popular anemia drug for unapproved uses to boost sales and to take market share from a rival drug maker.
Although doctors can prescribe medications for off-label uses, drug companies are banned from promoting use among certain patients or at doses that aren't approved by the U.S. Food and Drug Administration.
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"Biotech and pharmaceutical companies, like Amgen, do critically important work," said Marshall Miller, acting U.S. attorney in Brooklyn, N.Y., for this case. "That work can extend and enhance the lives of Americans or it can place those lives at risk in the pursuit of profits."
Amgen declined to comment about its plea and the settlement reached Tuesday while it awaits final approval from a federal judge Wednesday. The company had disclosed last year that it had reached a preliminary settlement of these cases and it took a charge of $780 million to cover the expected costs.
Aranesp was one of Amgen's best sellers for the last decade and contributed to Amgen's rapid rise in the drug industry. Aranesp is approved for treating patients suffering from anemia caused by chemotherapy and renal failure.
The drug posted revenue of $2.3 billion last year, but sales have steadily declined amid safety warnings and increased scrutiny of its costs to Medicare.
Amgen agreed Tuesday to pay a $150-million criminal penalty and $612 million to resolve 11 related whistle-blower complaints. Ten of the complaints remain under seal until the court accepts the settlement.
One of the key whistle-blower complaints that led to the settlement involved a former Aranesp product manager, Kassie Westmoreland, who worked at Amgen from 2002 to 2005. She filed suit against Amgen under seal in 2006, alleging that Amgen gave "liquid kickbacks" to doctors, among other inducements.
Her suit charged that Amgen overfilled vials of Aranesp to supply doctors with extra medicine at no charge. She alleged the company then encouraged doctors to bill Medicare and private insurers for this surplus amount, reaping them extra profit. Amgen pursued this strategy to take business away from Procrit, a popular anemia drug sold by Johnson & Johnson, according to the suit.
The Westmoreland case cited internal spreadsheets used by Amgen sales representatives to allegedly show doctors how much more money they could make from the overfills.
"Amgen provided extra product in the Aranesp vials as a liquid kickback that doctors could then cash in with federal and state governments through Medicare and Medicaid reimbursements," said Charles Kester, a Calabasas attorney who represents Westmoreland along with law firms in Boston and Washington, D.C. "Amgen is being held to account in a serious way for its choices to market this drug unlawfully."
Westmoreland is still pursuing separate claims against Amgen for retaliation and wrongful termination. She stands to receive some portion of the Amgen settlement under federallawfor whistle-blowers.
Amgen's shares fell 21 cents to $89.29 in trading Tuesday.
The company's case adds to a string of major settlements the federal government has secured from pharmaceutical giants. In July, GlaxoSmithKline agreed to plead guilty to federal charges and pay $3 billion in the largest healthcare-fraud settlement in U.S. history.
However, some critics say the government's enforcement efforts don't go far enough because the company executives involved typically avoid significant penalties or jail time.
Miller said there wasn't sufficient evidence in this case to charge any individuals at Amgen, but he said company executives and directors have been put on notice about the importance of complying with the law.
"I don't think Amgen is viewing this as the cost of doing business," the prosecutor said. "Amgen leadership must make sure this doesn't happen again."