Medicis: A Diaper-Rash Sales Pitch That Reached Medicaid

The Medicis Loprox pediatric settlement required Medicis Pharmaceutical Corporation to pay the United States $9.8 million to resolve allegations that it promoted Loprox for diaper rash in children under ten, causing Medicaid to pay millions of dollars for prescriptions it should not have covered. Four former Medicis sales representatives brought this pharmaceutical fraud case. For someone who has been sent into a doctor’s office to deliver a particular message, the connection is direct: what the company tells prescribers can become a bill to taxpayers.

The Justice Department announced the civil settlement on May 8, 2007. Medicis, based in Scottsdale, Arizona, sold a topical skin preparation. The government and the former employees alleged that its sales personnel targeted pediatricians from approximately November 2001 through April 2004, urging them to prescribe Loprox for diaper rash.

What Is Considered Off-Label Promotion?

Off-label promotion means a manufacturer encourages a use outside a drug’s FDA approval. In the Medicis case, the alleged campaign concerned both the condition being treated and the age of the patient: diaper rash in children under ten, a group the drug was not approved for.

The Justice Department described Loprox as an FDA-approved fungicide for patients over ten. It said treatment of diaper dermatitis and other skin disorders in children under ten was not a medically accepted indication. A drug approved for older patients was allegedly being pitched for diaper rash in young children, with taxpayers paying for the prescriptions.

For a sales insider, the audience matters as much as the words. We examine the connection between the doctors a campaign targets, the use it promotes and the patients those doctors are being asked to treat. In this case, pediatricians and diaper rash make the alleged departure from the approved population concrete.

How the Loprox Campaign Reached Medicaid

The government alleged that Medicaid would not have reimbursed the Loprox prescriptions had authorities known they resulted from Medicis’ off-label campaign.

The industry separates selling a drug from billing for a prescription. The usual distribution path runs from manufacturer to wholesaler to dispenser. A pharmacy or physician can submit the government claim that a manufacturer’s conduct caused. In a promotion case, we connect the company’s message to the prescription and the request for payment.

For Medicaid, a medically accepted indication is a use supported by FDA approval or by a citation in a recognized drug reference. That coverage rule ties payment to what the drug is being used to treat. The government’s Loprox allegation joined the pediatric sales campaign to prescriptions for a use it said fell outside that coverage boundary.

A sales report can show that doctors chose the drug without answering why they prescribed it. For an insider describing a campaign like the one alleged here, we need to connect the promoted use to the patients and the Medicaid payments. The pediatrician’s specialty, the diaper-rash pitch and the patient’s age are what make that connection specific to Loprox.

What a Prescription Claim May Leave Out

The reason a patient receives a drug may be recorded in the medical chart without being captured when the pharmacy dispenses it. A May 2018 article in Managed Care, Indication-Specific Drug Pricing–Simple in Theory, Complex in Reality, describes that gap in a discussion of pricing drugs according to the conditions they treat. It explains why identifying the indication can be difficult for payers even when that information exists elsewhere.

That observation helps explain the value of a sales insider’s account. In the Medicis allegations, the intended use was central: sales representatives were allegedly urging pediatricians to prescribe for diaper rash. An account of that campaign could tell investigators something a payment entry alone might not reveal.

When the Sales Pitch Reaches the Coverage Decision

Shire’s later drug-promotion settlement illustrates another way a manufacturer’s message can reach public spending. The government alleged that its representatives and other agents made false and misleading claims about Vyvanse’s effectiveness and potential for abuse to individual physicians and state Medicaid formulary committees, which help decide drug coverage.

Medicis allegedly aimed its message at pediatricians. Shire’s allegations also reached the people deciding which drugs the program would cover. The common question is where a manufacturer’s representations entered the decisions that led to government-paid prescriptions.

How Much Money Do Pharmaceutical Whistleblowers Get for Exposing Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Medicis resolution shows how a group of employees can share in a civil settlement arising from the sales work they knew.

The Justice Department said the former representatives would collectively receive more than $1 million as their whistleblower award.

Our pharmaceutical whistleblower work connects an insider’s knowledge of the business to the prescriptions and public payments at issue.

What Sales Staff Can See Before a Claim Is Paid

Sales staff can know why a drug is being promoted to a particular group of doctors before a payer sees a prescription. Medicis’ case puts that vantage point in focus: the whistleblowers came from the sales force whose conduct was at issue.

The contribution of insiders also appears in the wider enforcement history. Public Citizen’s 2018 report, Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2017, found that whistleblower revelations, brought mostly under the False Claims Act, contributed to 54% of federal settlements from 1991 through 2017.

For a promotion case, we examine the sales account alongside the treatment and payment records. An insider may know the use a campaign was designed to encourage. The clinical information can show the use for which the patient received the drug. The payment records show where public money entered. Connecting those views is how we assess whether the campaign caused government payments for an uncovered use.

You Know the Message Behind the Prescription

You know which doctors the campaign targeted and what you were sent to tell them. Speak to our whistleblower experts about the campaign you saw. We work with you to build your strongest pharmaceutical whistleblower case, bring in pharmaceutical fraud whistleblower lawyers who understand promotion and reimbursement, and stay beside you through the case.