After a yearslong federal investigation over Nuedexta marketing and an “agreement in principle” earlier this year, Otsuka’s Avanir has reached a settlement with the feds. The drugmaker agreed to pay about $116 million million to resolve civil and criminal allegations as well as assist in a prosecution against former employees and a top prescriber.
In a series of criminal and civil complaints, the feds alleged Avanir paid kickbacks to doctors to boost their prescribing of Nuedexta, which is approved to treat pseudobulbar affect, or uncontrollable crying or laughing. Authorities say Avanir instead promoted the drug for elderly dementia patients in long-term care facilities.
In one complaint, authorities in Georgia said Avanir violated the Anti-Kickback Statute by paying a doctor to prescribe Nuedexta at a high rate to beneficiaries of federal healthcare programs and to recommend that other doctors do the same. In addition, U.S. attorneys in Ohio indicted three former employees and a top Nuedexta prescriber nationally for their participation in the kickback scheme.
Avanir is paying more than $95 million to resolve allegations of misleading marketing and that it violated the False Claims Act. It’s additionally paying a $7.8 million penalty and forfeiting more than $5 million in a deferred prosecution agreement over the case in Georgia. Avanir is assisting with the prosecution in the Ohio kickbacks case.
As part of the deal, Avanir entered a 5-year Corporate Integrity Agreement with the HHS Office of Inspector General. Avanir CEO Wa’el Hashad said in a statement the “company takes its responsibilities to patients, their families and caregivers, and healthcare providers very seriously.”
“Avanir is deeply committed to regulatory and legal compliance, integrity and ethical behavior, and the health and safety of patients,” he added.
The CEO joined the company in 2017 and made strengthening its compliance a top priority, Hashad said.
The company, which has been part of Otsuka since a 2014 buyout, has faced years of scrutiny over its Nuedexta marketing. In 2017, CNN reported that the company had marketed the drug primarily to nursing home residents, even though Nuedexta hasn't been tested extensively in elderly people. Sales had surged to $300 million in 2016, the network said.
Earlier this year, the company said it reached an “agreement in principle” with authorities to resolve the Department of Justice’s investigation. At the time, Otsuka estimated it would cost $120 million to resolve the probe.
Editor's note: This story was updated with a statement from Avanir CEO Wa’el Hashad.