Elan Reaches $203M Settlement with DOJ over Zonegran Marketing

Elan Pharmaceuticals Inc. has agreed to pay $203 million to resolve a federal probe into illegal marketing of the epilepsy drug Zonegran. 

The U.S. Department of Justice (DOJ) announced the Zonegran settlement on Wednesday, which will address both criminal and civil liability charges. Eisai Inc., a Japanese company that purchased Zonegran from Elan, has also agreed to pay $11 million to settle a civil lawsuit over its own alleged off-label marketing of Zonegran.

In addition to paying the fines, Elan has agreed to plead guilty to charges that it misbranded Zonegran as a treatment for mania, bipolar disorder, migraine headaches, eating disorders and as a weight loss drug. It also was charged for marketing the drug to treat epilepsy in children under the age of 16. The DOJ also accused Elan of paying illegal kickbacks to doctors in order to get them to prescribe Zonegran for off-label uses.

Under the settlement, Elan has agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services (OIG-HHS). The agreement will require the company to report regularly to OIG-HSS to show that it has instituted procedures to prevent similar crimes in the future.

Zonegran (zonisamide) is approved by the FDA only for treatment of seizures in adults. It was first marketed in the U.S. by Elan in 2000, until Eisai Inc. bought the rights to market the drug in 2004.

In February 2009, the FDA warned that Zonegran side effects may cause a chemical imbalance in the blood known as metabolic acidosis, which can damage the kidneys and bones and could retard growth in children.

The settlement comes as a result of a whistleblower lawsuit brought by Dr. Lee Chartock, a doctor from Massachusetts. Under the qui tam provision of the False Claims Act, whistleblowers who report a false claim against the government may be entitled to receive a portion of any money that the government recovers from the offenders. In return, the whistleblower must be the first to bring the case to the government’s attention, and must not publicize the claim until the DOJ decides to prosecute the claim.

Elan will pay a criminal fine of $97,050,266 for a misdemeanor violation of the Food Drug and Cosmetic Act. The company will also forfeit $3.6 million in assets. The company will pay another $102,890,517 for the civil lawsuit brought under the False Claims Act. $10 million of that money will go to Chartock. Eisai’s $11 million is also to resolve civil liability; $1 million of which will also go to Chartock.