A Johnson & Johnson subsidiary and a global investment firm have agreed to pay $11.5 million to settle allegations that a company they both owned, Therakos, Inc., violated the federal False Claims Act by marketing a medical device for non-approved uses.
Ross Feller Casey, noted for a recent series of victories in whistleblower cases, represented the whistleblowers who filed the lawsuit in 2012 in federal court in Philadelphia. The federal government investigated the allegations, then joined the case along with more than 30 participating states.
Ross Feller Casey’s Brian J. McCormick, Jr., a top national whistleblower attorney, said the allegations in the case centered around a medical device system and related pharmaceutical product for performing extracorporeal photopheresis, or ECP, to treat cutaneous T-cell lymphoma. In a potentially dangerous practice known as “off-label marketing,” Therakos allegedly promoted the system to doctors for unapproved uses, including to providers treating pediatric patients.
Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to the FDA. Before approving a drug, the FDA must determine that the drug is safe and effective for those uses. Once approved, the drug may not be marketed or promoted for off-label uses. Off-label promotion and marketing practices prioritize drug companies’ profits over patient care, McCormick added.
Under the settlement, a Johnson and Johnson subsidiary will pay $10 million, and The Gores Group, a Los Angeles-based investment firm, will pay $1.5 million. Therakos, based in West Chester, Pa. and currently owned by Mallinckrodt Pharmaceuticals, was previously owned by Ortho-Clinical Diagnostics, Inc., a former subsidiary of Johnson & Johnson, and, later, The Gores Group. The Gores Group sold Therakos to Mallinckrodt in 2015 for $1.325 billion.
Two former Therakos employees brought the issues to light.
The False Claims Act allows citizens like these whistleblowers to file a lawsuit on behalf of the United States and earn a reward when they witness and report fraud involving federal programs or funds. These two whistleblowers will split more than $2.75 million.
“This case is a testament to the powerful public interest served by a collaboration between government enforcement agencies and dedicated private citizens,” McCormick said. “The False Claims Act worked as designed by returning much-needed taxpayer dollars to the U.S. Treasury and protecting our most vulnerable citizens, including children.”
McCormick complimented Charlene Keller Fullmer and John Crutchlow of the U.S. Attorney’s Office for the Eastern District of Pennsylvania for their outstanding work on the case.
“Once again, the U.S. Attorney’s office in Philadelphia has supported whistleblower efforts and successfully prosecuted a significant case,” McCormick added. “AUSAs Fullmer and Crutchlow continue to show they are experts, supportive, and dedicated.”
A team from the National Association of Medicaid Control Fraud Units was also invaluable in representing the states’ interests.
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