Healthy Skepticism Library item: 10914

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Clarke T.
Jazz settles drug promotion lawsuit for $20 mln
Reuters 2007 Jul 13
http://www.reuters.com/article/topNews/idUKN1339700920070713?rpc=44

Full text:

BOSTON, July 13 (Reuters) – Jazz Pharmaceuticals Inc. said on Friday it reached a settlement with federal authorities over the misleading promotion of its drug Xyrem, which is approved in the U.S. to treat excessive sleepiness associated with narcolepsy.

Jazz acquired Xyrem when it purchased Orphan Medical in 2005.

Jazz agreed to pay $20 million in civil and criminal penalties over a period of five years, in line with estimates provided by the company in its initial public offering statement of May 31.

Orphan Medical pleaded guilty to misbranding of a pharmaceutical product and admitted that it had engaged in a scheme to expand the market for Xyrem by promoting it for indications for which it is not approved, including fatigue, insomnia, chronic pain, depression and other disorders, according to the Justice Department.

The criminal misbranding scheme induced physicians to write prescriptions for Xyrem that were not reimbursable by private health insurers or public insurance programs like Medicare and Medicaid, causing the insurers to lose millions of dollars, according to a statement from the U.S. Department of Justice.

While physicians are legally allowed to prescribe drugs for any condition, drug companies are not allowed to market them that way.

The active ingredient in Xyrem is gamma-hydroxybutyrate, or GHB, which is classified by the Department of Health and Human Services as a “date rape” drug.

Shares of Jazz fell 18 cents, or 1.2 percent, to $15.16 in afternoon trading on Nasdaq.