Company pleads guilty, admitting it illegally promoted drug

As reported in NewsDay

It is a powerful and fast-acting depressant, and federal health authorities classify it as a date-rape drug. The Food and Drug Administration has approved the use of the drug _ Xyrem, also known as gamma-hydroxybutyrate or GHB _ for only two conditions.

But a pharmaceutical company admitted in a settlement Friday that it marketed the drug to doctors for a wide range of illnesses it was not approved to treat.

Orphan Medical Inc., a subsidiary of Jazz Pharmaceuticals, pleaded guilty in U.S. District Court in Brooklyn to a charge of felony misbranding of a pharmaceutical product. Orphan and Jazz agreed to pay $20 million in penalties.

"The illegal conduct charged today put profits ahead of public health," said FDA Special Agent-in-Charge Kim A. Rice.

In July 2002, the FDA approved the sale of Xyrem for the treatment of cataplexy, a condition in which weak or paralyzed muscles manifest themselves in a sleep disorder known as narcolepsy. It was later approved for treatment of excessive daytime sleepiness.

But Orphan admitted in its plea that it promoted the drug to physicians for off-label uses, including fatigue, insomnia, chronic pain, weight loss, depression, bipolar disorders and movement disorders such as Parkinson's disease.

The company also admitted that it paid a psychiatrist tens of thousands of dollars to promote the drug in speeches across the country. Prosecutors said in a release that the psychiatrist suggested that the drug was safe for children and the elderly and that its active ingredient was not really a date-rape drug _ although the Department of Health and Human Services has classified it as one.

Pharmaceuticals manufactured under strict standards can still injure or kill if used for unauthorized reasons, said Mark J. Mershon, who heads the FBI office in New York.

"Tainted, counterfeit or illicit drugs are not the only ones that pose substantial health risks for consumers," he said.

As a label on boxes of the drug warned, Xyrem can induce sleep quickly and cause serious side effects, including difficulty breathing while asleep, confusion, abnormal thinking, depression, nausea, vomiting and sleepwalking.

Improperly used, the drug can cause dependence, seizures, coma and even death, the government said.

A former Orphan sales representative, Shelley Lauterbach, filed a whistleblower lawsuit in 2005 that reported the company's behavior, according to her lawyers, the firm of Phillips & Cohen.

"I am pleased that the Justice Department pursued this case so aggressively and brought the matter to a close," Lauterbach said in a release.

Orphan will pay $12.2 million in criminal restitution to public and private health insurers, as well as a criminal fine of $5 million, and Jazz guarantees its subsidiary will pay, according to a news release. The companies will also pay $3.75 million, plus interest_ a portion of which was ordered in the criminal case _ to resolve civil charges.

"We are pleased to have resolved this matter, which arose from the actions of Orphan Medical, a company that Jazz Pharmaceuticals acquired in 2005," said Dr. Samuel Saks, Jazz Pharmaceuticals' chief executive officer. "Our strong commitment to compliance was instrumental in the speedy resolution of this matter."

He said Jazz had fully cooperated with the government throughout the probe. The company said the $20 million in civil and criminal payments will be paid over a five-year period.