Illegal marketing of "date rape" drug results in $20 million settlement of civil and criminal charges

Whistleblower lawsuit exposed illegal push to increase drug use and sales

July 13, 2007 -- A whistleblower lawsuit - which until today had been sealed -- launched the federal investigation into the illegal marketing of the drug Xyrem that has resulted in a major civil and criminal settlement in federal district court in Brooklyn today.

Orphan Medical Inc., now part of Jazz Pharmaceuticals Inc., will pay approximately $20 million to the federal government and has pleaded guilty to one felony charge to settle the whistleblower lawsuit and criminal charges involving the company's aggressive marketing of Xyrem for unapproved uses. Xyrem's active ingredient is gamma hydroxybutyrate, or GHB, commonly known as the "date rape" drug. Orphan Medical was purchased by Jazz Pharmaceuticals Inc. in 2005.

Xyrem was initially approved by the Federal Drug Administration only to treat symptoms of narcolepsy, a rare sleep disorder. But Orphan Medical successfully pushed doctors to prescribe its drug for many other medical conditions to increase sales despite potentially dangerous side effects, according to the "qui tam" (whistleblower) lawsuit.

"Orphan disregarded patient health and safety for the sake of increasing its sales," said Erika A. Kelton, a Washington, D.C., attorney with Phillips & Cohen LLP, which represents the whistleblower. "Through the whistleblower lawsuit, our client brought to the attention of the government the types of off-label treatments Orphan allegedly was promoting for Xyrem. These included unapproved use for such conditions as fatigue, pain and psychiatric disorders."

Shelley Lauterbach, a former sales representative for Orphan, filed the "qui tam" (whistleblower) lawsuit in 2005 in federal district court in Brooklyn. But the case was sealed, meaning it wasn't known to the public, until today. The False Claims Act requires courts to seal qui tam lawsuits to allow time for the federal government to investigate the allegations.

"I am pleased that the Justice Department pursued this case so aggressively and brought the matter to a close," Lauterbach said.

Xyrem induces sleep very quickly. But it can have dangerous side effects including breathing difficulties, abnormal thinking, vomiting and depression. Abuse and misuse of the drug also can induce comas as well as cause deaths.

The distribution of Xyrem is severely restricted because it contains GHB. Congress placed tight restrictions on the distribution of Xyrem and GHB following widespread media coverage of instances where women died or were raped after GHB was slipped into their drinks.

The market for narcolepsy treatment is very small; it is estimated to be fewer than 150,000 patients nationally. To boost its sales beyond narcolepsy patients, the lawsuit said, Orphan employed the followed tactics:

  • sponsored events where speakers bombarded the doctors in attendance with the message that Xyrem should be used to treat a variety of medical conditions;
  • paid unrestricted "educational grants" to physicians as a reward or inducement to prescribe Xyrem for off-label purposes;
  • targeted physicians who were already prescribing Xyrem for aggressive sales call to reinforce off-label prescriptions and increase Xyrem sales;
  • paid tens of thousands of dollar in speaker fees to doctors who promoted the use of Xyrem for off-label purposes, such as insomnia and psychiatric disorders.

One of the company's most successful speakers promoting Xyrem was Dr. Peter Gleason, a psychiatrist whom the company paid tens of thousands of dollars. Company sales representatives were told to use him to speak to doctors because he could "work magic," according to the complaint. A federal grand jury indicted Dr. Gleason last year on criminal charges related to his participation in the scheme to increase Xyrem sales.

A former sales manager for Orphan, David Tucker, pleaded guilty in March to a single felony count of introducing a misbranded drug into interstate commerce. Tucker was Lauterbach's boss and is alleged to have promoted using Dr. Gleason for speaking events.

Orphan will pay to the federal government $3.75 million plus interest out of the $20 million settlement to resolve the qui tam lawsuit.

Attorney Kelton and Larry Zoglin, a San Francisco attorney with Phillips & Cohen, praised the work of the U.S. attorney's office in Brooklyn on the case.

"The U.S. attorney's office - particularly Assistant U.S. Attorneys Paul Kaufman and Geoffrey Kaiser -- immediately recognized that people's health and lives were at stake and did an excellent job investigating and prosecuting this case," Zoglin said. "We were fortunate to work with such a capable team."

Phillips & Cohen specializes in representing whistleblowers in qui tam lawsuits. For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.

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Case citation: U.S. et al ex rel Lauterbach v. Orphan Medical Inc. and Dr. Peter Gleason, CV05-038.