• Endo Pharmaceuticals - Not Your Typical Off-Label Settlement
  • March 10, 2014 | Author: Anne K. Walsh
  • Law Firm: Hyman, Phelps & McNamara, P.C. - Washington Office
  • Yes, this post relates to yet another off-label settlement between a pharmaceutical company and the federal government. But some aspects of this recent settlement, coupled with other recent cases, might indicate noteworthy trends in how these cases are being resolved. The defendants are Endo Health Solutions, and its subsidiary, Endo Pharmaceuticals Inc., based in Malvern, Pennsylvania. The drug is Lidoderm, a prescription drug patch that FDA approved to treat pain associated with post-herpetic neuralgia, or PHN. The government alleged that Endo marketed Lidoderm for general, non-PHN related pain indications, including lower back pain, diabetic neuropathy, and carpal tunnel syndrome. The company’s global settlement included a civil payment of $171.9 million, a criminal fine of $20.8 million, and a Corporate Integrity Agreement governing the company’s ongoing practices.

    Two U.S. Attorney’s Offices bifurcated the matter, with the civil investigation managed by the U.S. Attorney’s Office in Philadelphia, and the criminal investigation handled by the Northern District of New York. Dealing with multiple U.S. Attorney’s Offices can be complicated, but we have seen improved cooperation between multiple offices in recent cases.

    Endo managed to escape a corporate criminal charge by entering into a deferred prosecution agreement (“DPA”) with the government. In the DPA, the company admitted to certain criminal conduct, and agreed to pay a criminal fine and to impose enhanced compliance measures (many of the compliance provisions appear to overlap with the requirements of the Corporate Integrity Agreement). The DPA will not be final until it is accepted by the court.

    The government used asset forfeiture techniques to buttress the criminal penalty. As part of the resolution, the parties agreed to settle an in rem action the government had brought against a $10 million wire transfer intended for Endo Pharmaceuticals. It is unclear from the publicly available pleadings how the government traced the wire transfer, but suffice it to say that money transfers of this magnitude do not go unnoticed when a company is in the crosshairs of a criminal investigation. The government argued that the money constituted proceeds from a violation of the FDC Act, and therefore was subject to asset forfeiture under 18 U.S.C. § 981(a)(1)(C). As part of the criminal plea, the parties agreed to forfeit the $10 million wire transfer, plus pay an additional $10 million monetary fine. Asset forfeiture is a powerful tool for the government, and one law enforcement agencies particularly prefer because the money is earmarked to further fund their investigative efforts.