DOJ declines to join whistleblower lawsuit against Celgene

New Jersey-based Celgene ($CELG) in 2011 tucked a notice into a financial report that a U.S. Attorney in California was investigating its marketing of its cancer meds Revlimid and Thalomid. Nothing more was said until Thursday when the company divulged that the probe was tied to lawsuits filed against it by whistleblowers.

After a nearly three-year investigation, the U.S. Attorney has decided not to join those lawsuits, which accuse Celgene of marketing the drugs for unapproved uses and paying kickbacks to doctors to write prescriptions. One of the suits has been dismissed because of the DOJ's decision, but the other two are proceeding.

In an email, a Celgene spokesman said, "Today we learned that the United States Department of Justice declined to intervene in three cases under the False Claims Act and certain states' laws." It said the cases had been filed in California, Texas and Alabama but that the Alabama lawsuit was voluntarily dismissed based on the DOJ's decision not to get involved. Celgene said it intends to "vigorously defend our position in the two remaining actions."

The California case was filed in 2007 by a now-former Celgene sales rep. It claims the company put its sales team under heavy pressure to hype both of the drugs to oncologists "for whatever cancers they were treating, including blood cancers as well as solid tumors, on the basis of minimal evidence," attorneys said in a release. Reuben Guttman of Grant & Eisenhofer, which filed the California case, said in a statement Friday that, the government's decision not to join the suit, "is not a decision on the merits and that it reserves the right to get into the case."

Whistleblower lawsuits are not uncommon, and under federal law the government can join in if it believes alleged violations are serious and companies should be punished. The government's $500 million settlement last May with Ranbaxy Laboratories for selling subpar products began with a whistleblower lawsuit that the government decided to join. But the DOJ doesn't always decide to get involved, like in the cases against Celgene.

Thalomid generated $245 million in sales for Celgene last year, down 19%. Revlimid, on the other hand, is Celgene's primary product. Approved for a number of uses, it earned $4.3 billion last year--a 14% jump, according to the company's recent earnings report. The company has been trying to expand its uses, but not all of those efforts have turned out. Last year the FDA halted a study of Revlimid for use as a first-line treatment for elderly patients with B-cell chronic lymphocytic leukemia, or CLL, after 34 of the 210 patients in the Revlimid arm of the study died. That compared with 18 deaths among the 211 patients using chlorambucil. The company pointed out that "No specific causality for this imbalance has been identified."

- here's the lawsuit release

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