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$425 Million Cephalon Civil Settlement and Criminal Fine; In America's Largest
Date:9/29/2008

Biotechnology Medicaid Fraud Case; Qui Tam Whistleblower Attorney Brian P.

Kenney, Esq. Filed First Complaint With Client's Off-Label Marketing Allegations In 2003; Additional Complaints Were Filed; $375 Million Civil

Settlement, $50 Million Corporate Criminal Fine Today

PHILADELPHIA, Sept. 29 /PRNewswire/ -- Biotech drug manufacturer Cephalon, Inc. ("Cephalon") flouted federal regulations on a grand scale for years by off-label marketing its first three prescription drugs far beyond the cancer pain, epilepsy and narcolepsy specialists for whose patients those drugs had been FDA-approved. Instead, Cephalon focused its national marketing muscle on unapproved uses, targeting medical specialists with bigger patient populations, according to a Complaint filed in 2003 by Philadelphia qui tam whistleblower attorney Brian P. Kenney, Esq. The complaint was unsealed today with Cephalon's $375 million nationwide Medicaid fraud settlement and $50 million corporate criminal plea.

Kenney, lead partner of Philadelphia-based, Kenney Egan, McCafferty & Young, P.C., represents whistleblowers across the U.S. His whistleblower client is a former medical sales representative, area trainer and institutional representative for the Frazer, Pennsylvania-based drug manufacturer, one of Cephalon's original 27 sales hires in 1994. In 2003, on her behalf, Kenney brought the Government the first qui tam whistleblower Medicaid fraud allegations against Cephalon.

Kenney's filing, under seal as required by law, was the first complaint filed in the federal-state government investigation that resulted in today's national settlement and corporate criminal plea. A total of four whistleblower Complaints were unsealed today by the U.S. Attorney's Office for the Eastern District of Pennsylvania, along with the filing of a new federal Complaint, settlement agreement, and corporate integrity agreement, which settle all four whistleblower cases, Kenney explained.

Additionally, Cephalon entered a corporate criminal plea and paid a $50 million fine. The criminal case was based upon information provided by relators in the civil case, Kenney noted.

The first drugs on which Cephalon started its business are the three prescription medicines listed in Kenney's client's Complaint, the whistleblower attorney noted. Today, Cephalon's Web site presents nine medications, including those original three: Actiq(R), Gabatril(R), and Provigil(R).

Under FDA rules, prescription drug manufacturers and marketers may only promote their products for approved uses. Physicians are free to prescribe drugs for conditions beyond those for which approval has been received but marketing to induce off-label, unapproved use is not permitted.

Under Medicaid, the state-and-federally underwritten program for low-income and disabled Americans, reimbursement is allowed only for the FDA-approved use of a drug, not for off-label use, Kenney, a former federal prosecutor, explained.

Among many schemes to support off-label marketing alleged in the relators' and Government Complaints are:

-- Intensively marketing Actiq to physical medicine and rehabilitation, and pain management specialists;

-- Encouraging sales reps to make false statements about the efficacy of Gabatril, and providing dosing recommendations when none have been determined for depression;

-- Leaving "huge doses of Gabatril" with psychiatrists when no approved use or dosage existed for psychiatrists;

-- Encouraging sales representatives to recruit psychiatrists by paying the physicians honoraria in return for recommending Gabatril to other psychiatrists; and

-- Assisting physicians in securing Medicaid reimbursement for Actiq when off-label use was ineligible for Medicaid payment.

Federal and state False Claims Acts allow private citizens with knowledge of fraud to help the government recover ill-gotten gains and additional civil penalties. These statutes allow the government to collect up to three times the amount defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Kenney noted that whistleblowers, legally known as "qui tam relators," can receive between 15 and 30 percent of the Government's recovery.

In executing the False Claims Act Settlement Agreement, Cephalon denied liability, wrongdoing or improper conduct.

Case: UNITED STATES OF AMERICA ex rel. LUCIA PACCIONE. States ex rel. LUCIA PACCIONE, and LUCIA PACCIONE, individually v. CEPHALON, INC., Eastern District of Pennsylvania, 036268.

For the entire Kenny news release visit http://www.PRforLAW.com where it and filed public documents will be posted as they become available.

About Kenney, Egan, McCafferty & Young, P.C. (http://www.kemy-law.com) A nationally known law firm, Kenney Egan McCafferty & Young, P.C. ("KEMY") was founded by former veteran federal prosecutors now zealously advocating in the public interest for individuals, corporations, labor organizations, and employee benefit plan clients.


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