What is not stated in the press releases is the intervention of the States Medicaid Fraud Control Units.  Zonegram was illegally marketed to low-income and foster children, whose reimbursements were made through the filing of false claims.

Elan Will Pay $203 Million to Settle Illegal Marketing Probe of Zonegran

Elan Corp. will pay $203 million and a U.S. unit of the Irish drugmaker will plead guilty to a misdemeanor charge to resolve an investigation of its marketing of the epilepsy medicine Zonegran.

Elan will pay $102.9 million to resolve civil claims and $100 million in criminal fines and forfeitures, according to the U.S. Justice Department. Japanese drugmaker Eisai Inc., which bought the drug from Elan in 2004 for $128.5 million, also will pay $11 million to settle civil claims.

The Elan Pharmaceuticals unit will plead guilty in federal court in Boston to a charge of misbranding Zonegran, which was approved by U.S. regulators for treatment of epileptic seizures in adults over age 16, the Justice Department said yesterday in a statement. Dublin-based Elan promoted Zonegran for uses including mood stabilization, bipolar disorder, migraine headaches, weight loss and seizures in children.

“Elan’s off-label marketing efforts targeted non-epilepsy prescribers and the company paid illegal kickbacks to physicians in an effort to persuade them to prescribe Zonegran for these off-label uses,” according to the statement.

Elan entered into a corporate-integrity agreement with the inspector general of the Health and Human Services Department. It also settled a whistleblower lawsuit filed in 2004 under the False Claims Act by Lee Chartock, a Massachusetts physician. The law allows private citizens to sue on behalf of the government and share in any recovery.

‘Highest’ Standards

“We are pleased to have reached this agreement, which concludes a longstanding legal matter on a product Elan divested over six years ago,” Elan General Counsel John B. Moriarty Jr. said in a statement. “Elan is committed to adhering to the highest ethical and legal standards.”

The federal share of the civil settlement is $59.5 million. State Medicaid programs will split $43.4 million. Chartock’s share of the federal recovery is more than $11 million, according to the Justice Department.

Zonegran, first sold in May 2000, was the last of seven anti-epilepsy drugs to enter the market, according to the misdemeanor criminal charge against Elan Pharmaceuticals Inc., or EPI. In its first year, Zonegran had only 1 percent of the market, according to prosecutors.

In 2002, EPI “came under significant financial pressure” because of an investigation of its financial practices by the U.S. Securities and Exchange Commission that caused shares to drop to $2 from $65 in six months, according to the criminal charge. In evaluating its options, EPI “decided to retain Zonegran because of its large potential for growth, particularly in unapproved areas,” prosecutors said.

Sales Staff Trained

EPI then trained its sales staff to promote Zonegran for off-label uses, including for children, pain, psychiatric disorders, migraines and movement disorders, prosecutors said. Letters sent to pediatricians described how to administer Zonegran to a child by putting a capsule’s contents into applesauce, according to the document, which EPI will admit to in its guilty plea.

Doctors with the potential to write many prescriptions were invited on expense-paid trips to Bermuda, Key Largo, Florida, Banff in Alberta and Tucson, Arizona, to hear speeches on off- label uses, according to the charge. Sales “increased dramatically,” rising 80 percent from August 2001 to August 2002, while 2003 revenue increased 87 percent over the previous year, prosecutors said.

Several other drugmakers have reached settlements under the False Claims Act with the U.S. for off-label marketing of anti- epilepsy drugs.

“We can expect these kinds of results to continue as long as the industry turns a blind eye to off-label marketing by their sales forces,” Chartock’s attorneys, Robert M. Thomas Jr. and Suzanne E. Durrell, said in a statement.

The case is United States ex rel. Lee Chartock v. Elan Corp., 04-cv-11594, U.S. District Court, District of Massachusetts (Boston).