Drug Maker Aegerion Agrees to Plead Guilty and Pay $35 Million to Resolve Criminal Charges

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https://www.justice.gov/usao-ma/pr/drug-maker-aegerion-agrees-plead-guilty-and-pay-35-million-resolve-criminal-charges-and

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Friday, September 22, 2017

Drug Maker Aegerion Agrees to Plead Guilty and Pay $35 Million to Resolve Criminal Charges and False Claims Act Allegations

BOSTON – The U.S. Attorney’s Office announced today that Aegerion Pharmaceuticals, Inc, a Cambridge, Massachusetts-based subsidiary of Novelion Therapeutics Inc., has agreed to pay over $35 million to resolve criminal and civil charges relating to its marketing of Juxtapid, a drug that is labeled with a warning that it may cause serious liver and stomach problems and that is approved to treat high cholesterol only for patients with a rare genetic disease called homozygous familial hypercholesterolemia (HoFH).
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In a criminal Information filed today, the United States charged that, from December 2012 to December 2015, Aegerion violated the Federal Food, Drug, and Cosmetic Act in connection with its sale and promotion of the drug Juxtapid. Aegerion management and sales personnel distributed Juxtapid not only for the treatment of HoFH, but also as a treatment for high cholesterol generally, without adequate directions for such use. Furthermore, even though the FDA had approved Juxtapid subject to a Risk Evaluation Mitigation Strategy (REMS) to ensure that prescribers were informed of the drug’s risks and that Juxtapid was prescribed only for patients with a clinical or laboratory diagnosis consistent with HoFH, the Information alleges that, during the relevant time period, Aegerion failed to give health care providers complete and accurate information about the clinical diagnosis of HoFH, therefore failing to comply with the required elements under the REMS to assure safe use of Juxtapid. Under the terms of a plea agreement, Aegerion has agreed to plead guilty to these charges and to pay a criminal fine and forfeiture of $7.2 million.

Today’s resolution includes a deferred prosecution agreement to resolve a felony charge that Aegerion conspired to violate the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Under the terms of the deferred prosecution agreement, Aegerion admitted to facts demonstrating that the company conspired with its sales employees, including senior managers, to obtain patients’ personally identifiable health information, without patient authorization, for commercial gain. Aegerion has agreed to implement enhanced compliance provisions, including periodic certifications to the government concerning its implementation of those provisions.

Under the terms of a civil False Claims Act settlement, Aegerion will pay $28.8 million over three years to resolve allegations that: Aegerion distributed Juxtapid for patients without a diagnosis of, or consistent with, HoFH; Aegerion employees, including senior managers, made false and misleading statements to doctors that the use of Juxtapid was appropriate in patients with high cholesterol, irrespective of whether such patients had a diagnosis of HoFH and despite counter-indications to a diagnosis of HoFH; Aegerion employees at times altered or falsified statements of medical necessity and prior authorizations that were submitted to federal health care programs; and Aegerion defrayed patients’ copayment obligations for Juxtapid, in violation of the Anti-Kickback Statute, by funneling funds through Patient Services, Inc., an entity that promoted its ability to create a “reimbursement vehicle” for Aegerion from patients who otherwise would have received free drug.

As part of the resolution, Aegerion has also agreed to enter into a separate civil consent decree with the FDA to resolve civil liability under the FDCA for its distribution of Juxtapid that was misbranded because Aegerion failed to comply with the requirements of the Juxtapid REMS program and because Juxtapid’s labeling lacked adequate directions for all of Juxtapid’s intended uses.. Aegerion also entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the Department of Health and Human Services. The five-year CIA requires, among other things, that Aegerion implement measures designed to ensure that its promotional activities and any arrangements and interactions with third-party patient assistance programs are compliant with the law. In addition, the CIA requires reviews by an independent review organization and compliance-related certifications from company executives and Board members.
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The civil settlement resolves a lawsuit filed by Michele Clarke, Tricia Mullins, and Kristi Winger Szudlo, former employees of Aegerion, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals, known as relators, to sue on behalf of the government for false claims and to share in any recovery. The qui tam suit was filed in the District of Massachusetts and is captioned United States ex rel. Clarke, et al. v. Aegerion Pharmaceuticals, Inc., et al., No. 13-CV-11785 (D. Mass.). Relators will receive $4.7 million from the proceeds of the federal civil settlement.
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[nitpicker]

1. Aegerion in SEC hot water

https://www.sec.gov/news/press-release/2017-175

Pharmaceutical Company Paying Penalty for Misleading Investors About Sales Metric

FOR IMMEDIATE RELEASE
2017-175
Washington D.C., Sept. 22, 2017—

The Securities and Exchange Commission today filed fraud charges against a Massachusetts-based biopharmaceutical company that exaggerated how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue.

Aegerion Pharmaceuticals, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013. The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions ultimately purchased the drug. The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases.
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According to the SEC’s complaint, Juxtapid is used to treat a rare and potentially life-threatening genetic condition that causes extremely high cholesterol. In 2013 and 2014, it was priced at approximately $250,000 to $300,000 annually per patient. Following Juxtapid’s introduction in 2013, investors and investment analysts had little financial data to estimate Aegerion’s future revenues from sales of the drug.

Aegerion allegedly provided details on the number of Juxtapid prescriptions during several subsequent earnings calls, but this data alone was insufficient for analysts and investors trying to forecast the company’s future revenues because only prescriptions that were actually filled “converted” into sales. According to the SEC’s complaint, it wasn’t until October 2014 that Aegerion disclosed to investors that the conversion rate was actually in the range of 50 to 60 percent. But Aegerion allegedly failed to reveal to investors even then that the conversion rate had hovered around 50 percent since 2013.
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