Therakos: Two Owners, One Pediatric Promotion Case

The Therakos Gores pediatric settlement totaled $11.5 million over allegations that Therakos promoted its UVAR XTS and CELLEX drug-device systems for unapproved uses in children. The government alleged that the promotion caused false claims to Medicaid, the Federal Employee Health Benefits Program and Tricare. For someone who worked in sales, medical affairs or reimbursement, the important details are the treatment the company promoted, the patients it targeted and how that treatment reached a government bill.

The Justice Department announced the settlement on November 19, 2020. This pharmaceutical fraud case grew from a qui tam case in the Eastern District of Pennsylvania. It reached both the Johnson & Johnson ownership period and the alleged continuation of the sales practices after The Gores Group acquired Therakos.

What the Therakos Drug-Device System Did

Therakos combined a drug with a blood-processing device. Its extracorporeal photopheresis systems administered UVADEX, the medication methoxsalen, through a process that treated blood outside the patient’s body before returning it.

The system removed some of the patient’s blood and used a centrifuge to separate red cells from white cells. It returned the red cells to the patient, mixed UVADEX with the white cells, exposed that mixture to ultraviolet light and returned the treated cells.

The Food and Drug Administration approved UVADEX in 1999 for palliative treatment of the skin manifestations of cutaneous T-cell lymphoma that had not responded to other treatment. That cancer involves immune-system T-cells migrating to the skin and causing lesions.

The commercial question is which patients the company encouraged health care providers to treat with that system.

What Is Considered Off-Label Promotion?

Off-label promotion concerns marketing a product for a use outside its Food and Drug Administration approval. In the Therakos case, the government alleged promotion to treat pediatric patients for unapproved indications from 2006 through 2015. The Justice Department said the systems had no FDA approval for use in the pediatric population during that period.

According to the government, Therakos’s sales effort targeted children outside the systems’ approval and caused false claims to taxpayer-funded health care programs.

Why Two Former Owners Paid Separately

Medical Device Business Services, a Johnson & Johnson subsidiary, agreed to pay $10 million to resolve allegations concerning Therakos’s pediatric promotion between 2006 and 2012. Therakos was a Johnson & Johnson subsidiary during that period.

The Gores Group agreed to pay an additional $1.5 million to resolve allegations that Therakos continued the improper sales and promotion practices after Gores acquired the business in 2012.

The ownership changed. According to the government, the pediatric sales push continued. For an employee who saw the business change hands, the date on a sales instruction matters: it places that instruction within the owner’s period.

We would examine what each owner directed, approved or continued. Dated sales plans, training materials and internal reviews could help explain whether a pediatric sales objective persisted through the acquisition. An account of the ownership change becomes useful when it connects the company’s decisions to the promotion an employee actually saw.

Are Pharmaceutical Companies Liable for False Claims?

Pharmaceutical companies can face False Claims Act liability when they knowingly cause false claims for government payment, including claims submitted by a healthcare provider. In Therakos’s case, the government alleged that the company’s promotion caused false claims to the programs named in the settlement.

The practical connection runs through the treatment and its reimbursement. The sales team may know which uses it was told to promote. Medical affairs may know what information supported the message. A reimbursement employee may know what the provider was told about getting paid. We bring those accounts together around the use, the claim and the company’s role in causing it.

For a photopheresis treatment, we would compare the use described in the sales presentation with the patient’s treatment records, then examine what supported payment under that patient’s program.

How Sales Quotas Drive Off-Label Promotion

Sales targets and reimbursement instructions can reveal the purpose of a promotional campaign. A separate whistleblower complaint against Endo Pharmaceuticals illustrates how specific the internal account can be. The complaint put it bluntly:

That allegation puts management’s sales expectations at the center of the story. The target itself can help explain why representatives pursued particular uses and which instructions mattered in the field.

Another complaint in the Endo litigation alleged that promotional material showed physicians how to write Lidoderm prescriptions to avoid payer scrutiny of off-label reimbursement. That allegation connected the sales presentation to the information used to get a prescription paid.

For someone familiar with Therakos, the comparable questions concern the pediatric audience, the use promoted, the owner directing the effort and the route to reimbursement. A sales plan may explain the intended market. A presentation may show the treatment claim. A reimbursement exchange may explain how the company expected a provider to obtain payment. We work with pharmaceutical whistleblowers to connect what they know across those parts of the business.

Pediatric Promotion Beyond Therakos

Other civil settlements show pediatric promotion as a recurring allegation. Astellas Pharma US agreed to pay $7.3 million over alleged marketing and promotion of Mycamine for pediatric use. Its April 2014 settlement followed a case brought by a former sales representative.

Medicis agreed to a $9.8 million civil settlement over allegations that it promoted Loprox to pediatricians for diaper rash in children under ten. Four former Medicis sales representatives brought the allegations behind the May 2007 resolution. Their work put them close to the audience the company targeted and the use it wanted physicians to prescribe.

Public Citizen’s 2010 study, Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010, found that unlawful promotion accounted for the largest amount of federal financial penalties in the drug-company settlements it examined. The pediatric cases show a concrete version of that commercial incentive: expanding the population for a product expands the market the sales team can pursue.

The Whistleblower’s Place in the Therakos Case

The Therakos settlement resolved a qui tam case brought by whistleblowers under the False Claims Act. The Justice Department credited the whistleblowers’ information with helping uncover the alleged fraud and conserve government program funds.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. An employee’s value in a promotion case lies in the inside account of the campaign: what the company wanted sold, what it told providers and how it expected those treatments to be paid for.

You Know How the Pediatric Market Was Pursued

If your sales, medical affairs or reimbursement work showed how a pediatric treatment became a commercial target, talk with our whistleblower experts about what you saw. We develop the case with you, bring in pharmaceutical promotion whistleblower lawyers who understand the drug, device and payment connections, and remain your partners throughout the case.