Key Amgen Whistleblower Goes Undercover for HHS; She Makes 13 Secret Recordings in Five States for Special Agents; Her Evidence, Recorded Admissions in Off-Label and Pricing Schemes Central in Government's $762 Million Global Settlement
Philadelphia, December 19, 2012 –Amgen used illegal interlocking off-label marketing and pricing schemes to promote its multi-billion dollar anemia drug Aranesp. "It really was an ingenious, comprehensive, and very well coordinated series of marketing schemes that unfortunately endangered patients while enriching doctors for writing off-label prescriptions. There is no doubt that the schemes were wildly successful and significantly spiked Aranesp sales.
"What Amgen didn't know after it launched the Aranesp schemes was that our client, Jill Osiecki, a long-time marketing rep, recognized the danger to patients and, on her own, reported her concerns to the Government. Later, Department of Health and Human Services Office of Inspector General Special Agents asked her to work undercover for them," said qui tam whistleblowers' attorney Brian Kenney, of Kenney & McCafferty, P.C.
"Jill has a master's degree, spent 15 years at Amgen and before leaving the company, was a top performer in the biotech giant's top-performing district. In August 2004 she was so troubled by the Amgen schemes, which she feared were putting patients at risk, that she promptly contacted the Government and went undercover at special agents' request to make numerous recordings in five different states at national, regional, and district meetings," said Tavy Deming of Kenney & McCafferty, P.C., who also represents Ms. Osiecki.
"At the 13 sales and marketing meetings I secretly recorded
over 18 months at the request of federal authorities I'd hear
speakers jokingly tell participants to turn off their tape recorders,
or express the hope that no one was recording their session.
Those comments were always followed by uproarious laughter.
I laughed too, outside and inside, knowing the wire I wore was
bringing that guilty comment directly to the Government," Ms.
Osiecki said in a personal statement. 1
1 "Amgen Undercover Whistleblower Speaks Out 20121219" issued with this
Now, after eight years, her undercover work and the breadth of the evidence and information she provided in her case became a key to the federal Government's global settlement with Amgen for $762 million. The global settlement is comprised of a $612 million civil settlement, a $14 million criminal forfeiture payment and a $136 million criminal fine.
"We know of the many hundreds of hours she devoted at personal risk to advance this investigation and her years of hiding in plain sight as the Government investigated all the Amgen allegations," according to Deming. Under the federal False Claims Act ("FCA") qui tam actions allow private citizens with knowledge of fraud to help the Government recover ill-gotten gains and additional civil penalties. The FCA allows the Government to collect up to three times the amount it was defrauded, in addition to civil penalties from $5,500 to $11,000 per false claim.
In successful qui tam whistleblower cases in which the Government intervenes, whistleblowers are entitled to receive a percentage of qui tam recoveries, typically 15-to-25 percent, generally known as, "the relator's share." While six drugs are identified in Osiecki's Complaint, the most egregious allegations concern Aranesp, an "ESA" (Eythropoesis Stimulating Agent), FDAapproved to increase red blood cell production to treat anemia in dialysis and cancer patients undergoing chemotherapy.
Off-Label Marketing Opportunity
In 2003 Amgen perceived an off-label marketing opportunity for Aranesp when arch competitor Johnson & Johnson halted studies of its "Procrit" branded ESA in cancer patients after the patients developed a higher-than-expected number of blood clots. Ironically, Amgen had licensed Epogen to Johnson & Johnson to help fund the drug's development. Amgen had initially agreed to restrict its own use for dialysis, while Johnson & Johnson's Procrit had broader cancer-related Medicare coverage, including, "Anemia of Chronic Disease."
The market for the treatment of anemia in cancer patients who are not receiving chemotherapy was three times the size of the market for Aranesp's lone FDAapproved oncology use: chemotherapy-induced anemia. To exponentially grow Aranesp's sales and market share, Amgen developed a scheme to permeate this lucrative market from which Johnson & Johnson removed Procrit by promotinn Aranesp for this off-label use, a condition that Amgen branded "Anemia of Cancer" ("AOC").
To execute its Aranesp scheme Amgen sponsored a small pilot study purporting to show that Aranesp was effective for this condition, although that study's parameters were clinically inadequate to substantiate the safety or efficacy of Aranesp for this off-label use. Next, Amgen gamed Medicare reimbursement regulations by using the study to obtain coverage of Aranesp for AOC in an influential medical publication that lead to Medicare coverage for what, in fact, was an untested use.
Profiting From "The Spread"
Physicians were only too happy to switch to Aranesp when they were shown a "cost calculator" by Amgen marketing reps detailing how much they could profit from the spread between what Medicare reimbursed physician practices for the drug and the doctors' far cheaper acquisition cost. Additionally, through its false price reporting scheme, Amgen was able to create the spread so that medical practices profited handsomely from on- and off-label overuse of Aranesp, Kenney, who is a former federal prosecutor, explained.
The ugly truth about Amgen's AOC scheme became public in January 2007, when Amgen was forced to reveal that its own Aranesp clinical studies demonstrated that Aranesp increased the risk of death when used to treat certain cancer patients.
"When it launched the Aranesp scheme Amgen already was on notice of the potential dangers from using Aranesp in cancer patients based upon the unfavorable results of the Procrit study, but Amgen put profits first," Kenney said. The global settlement does not identify any patient deaths but, "it's safe to assume that many terminally ill patients not only failed to have the quality of their remaining lives improved but could have died earlier than necessary," he added.
Marketing Off-Label Prohibited
While physicians are free to prescribe drugs for off-label uses, pharmaceutical companies are prohibited from marketing the drugs for uses that have not been FDA approved. Generally, government-funded healthcare programs such as Medicare and Medicaid preclude reimbursement for off-label prescriptions. When a pharmaceutical company's illegal marketing practices cause off-label prescriptions to be written by doctors, and those prescriptions are paid for by federal Medicare and Medicaid dollars, the payment becomes an actionable FCA violation.
In addition to paying a $612 million civil settlement and agreeing to plead guilty to criminal allegations of misbranding of Aranesp, as part of the Settlement Agreement Amgen agreed to be bound by a Corporate Integrity Agreement ("CIA") with the Office of Inspector General of the United States Department of Health and Human Services ("OIG-HHS").
The federal investigation into Amgen's marketing practices was conducted through a collaborative effort of the U.S. Department of Justice, and the U.S. Attorney's Offices for the Eastern District of New York. The New York State Assistant Attorney General's Office led the investigation on behalf of the states and the National Association of Medicaid Fraud Control Units ("NAMFCU").
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Case Caption: United States ex rel. Osiecki et al. v. Amgen, Inc., et al., Civil
Action No. CV-05-5025 (EDNY).
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