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Manufacturer to Pay $20 Million for Improperly Promoting a Sleep Disorder Drug

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Jazz agreed to cooperate with the governments continuing criminal investigation, and will never promote the drug for uses other than those approved by the FDA.

Because of its risks, Xyrem can be distributed only under strict rules. The narcolepsy market in the United States is small, estimated at only 120,000 patients, and sales of Xyrem totaled just $29 million in 2006.

It is vital to public health and safety that pharmaceutical companies are deterred from improperly marketing their drugs to doctors and patients, said Peter D. Keisler, assistant attorney general, in a statement announcing the settlement.

Last year, prosecutors charged Dr. Peter Gleason, a Maryland psychiatrist, with improperly promoting Xyrem on Jazzs behalf. The indictment has raised questions about free-speech issues and the governments right to regulate the practice of medicine.

Dr. Gleason is fighting the charges. A trial has not been set yet.

The investigation began after Shelley Lauterbach, a former saleswoman for Orphan, filed a whistle-blower lawsuit in 2005 in Federal District Court in Brooklyn.

Lauterbach, who will share part of the $20 million settlement, said she was pleased that Jazz had agreed to plead guilty. Her portion of the settlement has not been determined.

Several other Bay Area biotech companies have also come under federal scrutiny recently for their drug marketing practices.

In October, InterMune of Brisbane agreed to pay $36.9 million to settle federal charges it engaged in off-label marketing of Actimmune.

Although the FDA had approved Actimmune for treating a bone disorder and a condition that makes people prone to infections, InterMune was accused of improperly promoting it to treat a fatal lung disease.

Scios of Mountain View, a division of Johnson & Johnson, has acknowledged that the U.S. attorney in San Francisco i
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