Endo Pharmaceuticals to Pay $171.9 Million to Settle Three Whistleblower Lawsuits

March 28, 2014 — U.S. taxpayers bear the cost of Medicaid fraud. To stop it, the government relies on inside employees who are willing to collaborate with the government to stop False Claims Act violations. The qui tam language in the statute gives whistleblowers the means to do what’s right. Tipsters who notify the government by bringing a lawsuit on its behalf may receive a share of the government’s resulting recovery.

Endo Allegedly Marketed Lidoderm for Off-Label Uses Unapproved by FDA

Drug maker Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) will spend $171.9 million to settle False Claims Act lawsuits alleging that Endo marketed its prescription drug Lidoderm for uses that the Food and Drug Administration (FDA) had not approved as safe and effective. Endo will also resolve criminal liability for the same conduct by agreeing to a forfeiture totaling $20.8 million and a deferred prosecution agreement.
Under the Federal Food, Drug and Cosmetic Act (FDCA), a pharmaceutical company must list the intended uses of its drugs when it files an application with the FDA to market a new drug. After a new drug is approved, its maker cannot promote the drug for “off-label” uses that the FDA has not approved.
From 2002 to 2006, Endo’s Lidoderm had been FDA-approved for neuralgia pain caused by shingles. Lidoderm’s packaging failed to include sufficient instructions for treating pain resulting from other causes, such as carpal tunnel syndrome, diabetic neuropathy or low back trauma. The FDA never approved Lidoderm for use with these types of pain, though Endo intended such uses. Endo sales managers allegedly directed company sales representatives to sell physicians on the prescription of Lidoderm for these off-label uses and to promote Lidoderm for use in workers’ compensation clinics. Because these uses were not FDA approved, however, they also were not covered by Medicaid. As a result, reports the U.S. Justice Department, millions of dollars in false claims were submitted to state and federal Medicaid programs.
Three whistleblowers had filed separate qui tam lawsuits against Endo — Max Weathersby and Peggy Ryan, former Lidoderm sales representatives and Gursheel Dhillon, a doctor. The False Claims Act suits alleged that between 1999 and 2007, Endo caused false claims to be filed with Medicaid, which is jointly funded with state and federal tax dollars. From the $171.9 million civil settlement, the federal government will receive $137.7 million and the states will share $34.2 million. The whistleblowers’ portions have not yet been determined.

Insiders Work to Expose Medicaid Fraud

Pharmaceutical employees frequently are the first to identify False Claims Act violations involving off-label marketing. But most insiders have no idea what’s involved with bringing a whistleblower lawsuit. To safeguard their own interests, informants need to learn the qui tam process before they collaborate with the government. With experienced lawyers in offices nationwide, Waters & Kraus is committed to protecting tipsters’ interests. Contact us by email or phone our Medicaid fraud lawyers at 855.784.0268 to learn how we can work together to fight health care fraud.

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