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Biotech Sued for Off-Label Marketing

Written By Brian Hicks

Posted December 20, 2012

Noted biotech company Amgen (NASDAQ: AMGN) has run into trouble with federal prosecutors, who claim the company violated FDA restrictions to market the anemia drug Aranesp for unapproved purposes.

The New York Times reports:

Amgen was “pursuing profits at the risk of patient safety,” Marshall L. Miller, acting United States attorney in Brooklyn, said in a telephone news briefing on Tuesday.

Amgen pleaded guilty to the illegal marketing of Aranesp and agreed to pay $762 million in penalties and settlements.

$612 million will go toward settling civil litigation. Another $136 million will go toward criminal fines, and there will be a forfeiture of $14 million.

Judge Sterling Johnson Jr., who is presiding over the case, agreed to Amgen’s offer—a move that opened up the possibility for further whistle-blower suits and more expansive settlements.

The specific problem appears to be that Amgen marketed Aranesp as a drug for use in treating anemia in cancer patients not under chemotherapy. Aranesp had only been approved for patients already undergoing chemotherapy. As a result, risk for death increased for patients not under chemotherapy—and ironically, this finding emerged from a study sponsored by Amgen.

Further, federal prosecutors alleged that Amgen suggested the drug be used in larger, less frequent doses in order to compete with Johnson and Johnson’s (NYSE: JNJ) Procrit, a rival drug.

Amgen did try to obtain FDA approval for this large-dose system, but the FDA declined to approve it citing inadequate research. Nevertheless, Amgen persisted in promoting larger doses, citing the same studies the FDA had rejected.

Off-label marketing, the practice Amgen engaged in, has become a concern in recent years; the government has collected several billions in fines over such cases. Just back in July, GlaxoSmithKline (NYSE: GSK) coughed up $3 billion over similar charges.

An interesting twist to the affair emerges when one considers that Aranesp used to be the biotech’s star product—it chalked up more than $4 billion in yearly sales. However, increasingly critical studies contributed to reducing sales since 2007. In the first nine months of 2012, worldwide sales amounted to just $1.55 billion.

On Tuesday, Amgen stock fell to $89.29, down 21 cents. It was down another 35 cents on Thursday morning to $88.14.