Jazz Pharmaceuticals Settles Marketing Allegations

Jazz Pharmaceuticals agreed to a $20 million settlement with federal authorities by the company’s promotion of narcolepsy drug Xyrem for unapproved uses.

The company’s Orphan Medical subsidiary pleaded guilty to a criminal misbranding scheme that promoted the drug for unapproved uses such as fatigue, insomnia, chronic pain, weight loss, depression and bipolar disorder, the Justice division said in a statement. Jazz acquired Orphan, and its drug Xyrem, in 2005.

“We are pleased to have resolved that matter” Jazz CEO Samuel Saks said in a statement. “Our strong commitment to compliance was instrumental in the speedy resolution of that matter.”

Orphan admitted that its sales representatives frequently made sales calls on doctors who didn’t specialize in narcolepsy, promoting off-label use, the Justice station said. The company plus admitted it relied on a psychiatrist to give talks around the country promoting the unapproved uses, paying him tens of thousands of dollars for speaking engagements.

With the approval of company sales personnel, the psychiatrist allegedly made misleading statements, including minimizing the dangers of a Xyrem overdose, suggesting the drug was safe to use

on children and the elderly. He additionally suggesting that the drug’s active ingredient, GHB, was not really a “term rape” drug, when, in fact, the federal area of Health and Human Services classifies GHB as a “date rape” drug. The psychiatrist advised doctors how to conceal the off-label prescriptions to compose certain they would be paid by insurers, according to the Justice office.

Jazz guaranteed Orphan’s obligation to pay criminal restitution to public and private insurers of approximately $12.2 million and a criminal fine of $5 million. Under a civil settlement, Jazz and Orphan have agreed to pay the government $3.75 million, plus interest. (Part of the restitution in the criminal case is additionally accounted for as a part of the civil settlement, resulting in a total payment by Jazz and Orphan of $20 million, the government said.)

Jazz went public final month at $18.00 a share, less than originally expected. Since thereupon the company’s stock has drifted lower.

Original post by Sarah Rubenstein