United States Attorney's Office for the Eastern District of Pennsylvania

11/19/2020 | Press release | Distributed by Public on 11/19/2020 22:28

Former Owners of Therakos, Inc. Pay $11.5 Million to Resolve False Claims Act Allegations of Promotion of Drug-Device System for Unapproved Uses to Pediatric Patients

PHILADELPHIA, PA - United States Attorney William M. McSwain announced that Johnson & Johnson ('J&J') subsidiary Medical Device Business Services, Inc. ('MDBS') agreed to pay $10 million to settle allegations under the False Claims Act that Therakos, Inc., a former J&J subsidiary, engaged in promotion of the UVAR XTS and CELLEX extracorporeal photopheresis ('ECP') systems for unapproved uses in pediatric patients between 2006 and 2012. The Gores Group ('TGG') agreed to pay an additional $1.5 million to resolve allegations that Therakos continued those alleged improper sales and promotion practices after TGG acquired Therakos from J&J in 2012.

In 1999, the Food and Drug Administration ('FDA') approved UVADEX, the drug administered by the Therakos ECP systems, for 'the palliative treatment of the skin manifestations of cutaneous T-cell lymphoma that is unresponsive to other forms of treatment.' Cutaneous T-cell lymphoma is a cancer of the immune system in which cancerous T-cells migrate to the skin, causing lesions. Therakos's ECP drug/device systems administer the medication UVADEX (methoxsalen) by first removing a portion of the patient's blood and separating the red blood cells from the white blood cells by using a centrifuge. The red cells are returned to the patient and the UVADEX solution is combined with the white cells. The device then irradiates the drug-cell mixture with ultraviolet light and returns the treated cells to the patient.

The government alleges that between 2006 and 2015, Therakos marketed and promoted its ECP systems to treat pediatric patients for indications that were not approved by the FDA. At no time during this period were the ECP drug/devices approved by the FDA for use in the pediatric population. The government further alleges that Therakos's improper promotion caused false claims to be submitted to three federal healthcare programs: Medicaid, the Federal Employee Health Benefits Program, and Tricare.

'While physicians are free to exercise their independent medical judgment to prescribe medications for uses beyond FDA approved indications, pharmaceutical and device companies cannot interfere with doctors' judgment by allegedly pushing the sale of their drugs or devices for non-FDA approved uses, especially in vulnerable populations,' said U.S. Attorney McSwain. 'That is what allegedly happened here, and my Office will continue to investigate such cases and hold companies accountable when there could be an effect on pediatric or other vulnerable patients.'

'Investigating allegations of the False Claims Act is a top priority,' said Maureen R. Dixon, Special Agent in Charge for the Office of the Inspector General, U.S. Department of Health and Human Services. 'We will continue to work with the U.S. Attorney's Office to ensure the integrity of the Medicare and Medicaid Programs.'

'The OPM OIG will always prioritize protecting the health and well-being of our most vulnerable patients' said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, OPM OIG. 'I would like to acknowledge our investigative staff and Department of Justice Partners for their hard work. This settlement represents our joint commitment to not only fighting against false claims but also protecting patients from harm.'

This settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. The civil lawsuit was filed in the Eastern District of Pennsylvania and is captioned United States ex rel. Johnson et al. v. Therakos, Inc. et al., No. 12-cv-1454.The qui tam complaint was filed by Brian McCormick of Ross Feller Casey LLP in Philadelphia, PA.

'We thank the relators and relators' counsel for their contributions to this case. Without information from citizens like the relators, detecting fraud and conserving government program funds would be much more difficult,' said U.S. Attorney McSwain.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the U.S. Office of Personnel Management Office of the Inspector General, and Department of Defense, Office of Inspector General, Defense Criminal Investigative Service. For the U.S. Attorney's Office, the investigation and settlement were handled by Assistant United States Attorney Charlene Keller Fullmer, Deputy Chief of the Civil Division, Assistant United States Attorney John T. Crutchlow, and former Auditor Denis Cooke.