Koster settles with Elan Pharmaceuticals and Eisai, Inc., in Medicaid fraud case --Missouri to receive $1.7 million--

Jefferson City, Mo.- Attorney General Chris Koster today announced that Missouri has joined with other states and the federal government in reaching an agreement with Elan Corporation, through its subsidiary Elan Pharmaceuticals, Inc. (EPI), to settle allegations that the company engaged in off-label marketing of its anti-epileptic drug Zonegran. Elan will pay the states and federal government $101 million in damages and penalties to compensate Medicaid and various federal healthcare programs for harm suffered as a result of its conduct.

In a related settlement, the federal government and states have separately agreed in principle to recover $11 million from Eisai, Inc., for allegedly continuing to improperly promote Zonegran until December of 2005, after acquiring the interests in Zonegran from Elan in April 2004.

The Missouri Medicaid Program will receive a total of $1,781,042 from the two resolutions.

"One of my top priorities as Attorney General is to go after companies that cheat Missouri taxpayers through Medicaid fraud," Koster said. "This settlement is a significant amount of money to be returned to taxpayers and should serve as notice to pharmaceutical companies that the Attorney General's Medicaid Fraud Unit will continue to hold them accountable."

Koster said Elan developed Zonegran and introduced the drug in 2000 following FDA approval of Zonegran to treat seizures. The government contends that Elan improperly marketed Zonegran for uses not approved by the FDA, causing false claims to state Medicaid programs and other federally funded health care programs.

Elan allegedly engaged in promotional activities designed to encourage pediatric neurologists to prescribe Zonegran, even though the drug was not approved for patients under the age of 16. The government also contended that Zonegran was promoted to treat neuropathic pain, obesity, headaches, and a variety of psychiatric conditions not approved by the FDA. The settlement with Elan also resolves allegations that it offered and illegally paid health care professionals to induce them to promote and prescribe Zonegran in violation of federal and state anti-kickback statutes. In addition to Elan's civil settlement, EPI has agreed to plead guilty to a federal misdemeanor charge under the United States Food, Drug, and Cosmetic Act (FDCA) that it misbranded the drug Zonegran through its improper promotional activities, and to pay a criminal fine of $102 million to the federal government.

As a condition of its civil settlement, Elan will enter into a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General, which will closely monitor the company's future marketing and sales practices.

Koster said citizens should report suspected Medicaid provider fraud or abuse and neglect to his Medicaid Fraud Hotline toll free at 800-286-3932, e-mail the complaint toattorney.general@ago.mo.gov or complete a complaint form at the Attorney General's Medicaid Fraud Website at http://ago.mo.gov/divisions/medicaid-fraud-control-unit-faqs.htm.