U.S. ex rel. James Marchese v. Cell Therapeutics, Inc.

April 23, 2007

On April 16, 2007, Cell Therapeutics, Inc. (“CTI”) agreed to pay $10.5 million to resolve allegations of the company’s illegal marketing of TRISENOX (arsenic trioxide), a prescription drug indicated for treatment of refractory or relapsed acute promyelocytic leukemia.  The case arose out of a complaint filed by a whistleblower (relator) under the Federal False Claims Act in which the Government intervened.  The Complaint in Intervention alleged that CTI promoted TRISENOX for off-label uses, which caused doctors to prescribe TRISENOX and submit claims to Medicare for uses not approved or medically accepted.  The complaint also alleged that CTI used illegal kickbacks to induce physicians to prescribe TRISENOX in violation of the Federal healthcare program antikickback statute.

According to the Complaint in Intervention, CTI allegedly implemented a plan to convince physicians and Medicare carriers that various off-label uses of TRISENOX were medically accepted and eligible for Medicare reimbursement.  Many oncologists rely on the Compendia Based Drug Bulletin to determine whether a drug is listed as medically accepted in the major medical compendia.  CTI allegedly gave the publisher of the Bulletin an educational grant of $10,000 per year in exchange for listing TRISENOX’s off-label indications in the Bulletin in a manner indicating that they were approved by the compendia, when they were not.  The publishers of the Bulletin also agreed to ship 3,000 copies of the next 3 issues of the Bulletin to CTI.  CTI then distributed copies of Bulletin to physicians and sent letters to Medicare carriers referring to the Bulletin, claiming that the off-label uses were medically accepted.  Many carriers paid claims for TRISENOX based on these false representations.

According to the Settlement Agreement, CTI has contended that to the extent it provided any false or misleading statements regarding the availability of Medicare reimbursement for TRISENOX, such statements were due to negligent advice provided by a third party, The Lash Group.  This subject of the advice provided by the Lash Group is the subject of a lawsuit between CTI and The Lash Group, Cell Therapeutics, Inc. v. The Lash Group et al., No. 07-310-JLR (W.D. Wash.).

The Complaint in Intervention also alleged that CTI provided kickbacks to physicians to induce prescribing of TRISENOX, including:

         Sham consulting agreements in which physicians were paid $500-$1,000 to attend conferences in order to listen to presentations on off-label uses of TRISENOX;

         Consultant dinners at lavish restaurants with honoraria;

         Advisory boards held at resort locations where all expenses, including entertainment, were paid for by CTI and attendees received $1,000 honoraria

         Monetary incentives to high prescribers in the form of speaker agreements in which physicians were paid $1,500 per lecture to discuss TRISENOX, especially off-label uses;

         Grants to reward physicians who demonstrated that they were advocates and active prescribers of TRISENOX (the grants ostensibly were for clinical studies but required little of the physicians and were paid out of the marketing budget);

         Purported independent CME programs that were not independent; and

         Routine monitoring of return on investment from “consultant” meetings, advisory boards, and CME programs

CTI is not currently manufacturing, marketing, selling, or distributing any products reimbursed by Federal health care programs.  For the next five years, CTI has agreed to notify the Office of Inspector General (“OIG”) of the Department of Health and Human Services and negotiate and enter into a Corporate Integrity Agreement prior to commencing the manufacture, marketing, sales, or distribution of such products.  According to the Settlement Agreement, the OIG has agreed to refrain from seeking permissive exclusion from the Federal health care programs, but it has reserved its right to comply with its statutory obligation to pursue mandatory exclusion for CTI.

By Michelle L. Butler

Categories: Enforcement