Business Crimes Hotline

The federal Food, Drug, and Cosmetic Act requires that companies specify the intended use for each biological product in the corresponding products' applications to the FDA, whose approval is then granted for each specified use that is safe and effective. It is a federal crime for manufacturers to promote “off-label” uses, defined as those not approved by the FDA.

Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, described the settlement, in part, by stating, “The FDA had approved therapeutic uses of Botox for only four rare conditions, yet Allergan made it a top corporate priority to maximize sales of far more lucrative off-label uses that were not approved by FDA. Allergan further demanded tremendous growth in these off-label sales year after year, even when there was little clinical evidence that these uses were effective. The FDA approval process ensures that pharmaceutical companies market their medications for uses that are proven to be effective, and this case demonstrates that companies that fail to comply with these rules face criminal prosecution and stiff penalties.”

The government's involvement was prompted by the filing of a False Claims Act (FCA) complaint in Georgia against the company by a consultant and sales representative for the company. This complaint was followed by whistleblower complaints in the Districts of Massachusetts and Maryland, filed by two former Allergan employees and another company sales representative, respectively.

$140.9-Million Plea Agreement for
Price Fixing By Panasonic Corp. and Whirlpool Corp. Subsidiary

On Sept. 30, the DOJ announced that it had reached an agreement with the Japanese Panasonic Corporation, and a Delaware-based subsidiary of Whirlpool Corporation, Embraco North America Inc., for the companies' respective roles in an international price-fixing conspiracy involving refrigerant compressors used in both residential and commercial applications. The agreement, which requires court approval, includes a guilty plea by each entity to a violation of the Sherman Act, as well as combined payment of $140.9 million in criminal fines. For its part, Panasonic agreed to pay a $49.1 million criminal fine, while Embraco agreed to pay a $91.8 million criminal fine.

GEORGIA

Botox Manufacturer Agrees To Guilty Plea and Combined Criminal and Civil Penalty

On Sept. 1, the U.S. Attorney's Office for the Northern District of Georgia announced that Allergan Inc., the Irvine, CA-based pharmaceutical manufacturer, had agreed to plead guilty and pay $600 million in connection with the company's off-label promotion of its biological product, Botox. The settlement figure, which remains subject to approval by the district court, includes a criminal fine and forfeiture totaling $375 million and a civil settlement with both the federal government and the states totaling $225 million.

The federal Food, Drug, and Cosmetic Act requires that companies specify the intended use for each biological product in the corresponding products' applications to the FDA, whose approval is then granted for each specified use that is safe and effective. It is a federal crime for manufacturers to promote “off-label” uses, defined as those not approved by the FDA.

Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, described the settlement, in part, by stating, “The FDA had approved therapeutic uses of Botox for only four rare conditions, yet Allergan made it a top corporate priority to maximize sales of far more lucrative off-label uses that were not approved by FDA. Allergan further demanded tremendous growth in these off-label sales year after year, even when there was little clinical evidence that these uses were effective. The FDA approval process ensures that pharmaceutical companies market their medications for uses that are proven to be effective, and this case demonstrates that companies that fail to comply with these rules face criminal prosecution and stiff penalties.”

The government's involvement was prompted by the filing of a False Claims Act (FCA) complaint in Georgia against the company by a consultant and sales representative for the company. This complaint was followed by whistleblower complaints in the Districts of Massachusetts and Maryland, filed by two former Allergan employees and another company sales representative, respectively.

$140.9-Million Plea Agreement for
Price Fixing By Panasonic Corp. and Whirlpool Corp. Subsidiary

On Sept. 30, the DOJ announced that it had reached an agreement with the Japanese Panasonic Corporation, and a Delaware-based subsidiary of Whirlpool Corporation, Embraco North America Inc., for the companies' respective roles in an international price-fixing conspiracy involving refrigerant compressors used in both residential and commercial applications. The agreement, which requires court approval, includes a guilty plea by each entity to a violation of the Sherman Act, as well as combined payment of $140.9 million in criminal fines. For its part, Panasonic agreed to pay a $49.1 million criminal fine, while Embraco agreed to pay a $91.8 million criminal fine.