Par Pharmaceutical: An AIDS Drug and a Nursing Home Sales Force

The Par Megace ES fraud settlement required Par Pharmaceutical Companies Inc. to pay $22.5 million over allegations that its off-label promotion caused false claims to federal health care programs. The government alleged that Par built a long-term-care sales force to sell an AIDS-related weight-loss drug to elderly nursing-home residents whether or not they had AIDS. It also alleged that Par pushed providers to switch patients from generic megestrol acetate to Megace ES with claims of superiority that lacked well-controlled studies to support them.

What Is Considered Off-Label Promotion?

Off-label promotion means marketing a drug for a use outside its FDA-approved labeling. In Par’s case, the approved use was treatment of anorexia, cachexia, or other significant weight loss in patients with AIDS. The alleged sales campaign reached elderly residents with weight loss regardless of whether they had that disease.

For Megace ES, the approval described in the Justice Department’s March 5, 2013 announcement tied the weight loss to AIDS. The alleged commercial target was broader.

The civil case connected off-label promotion to government payment. The United States alleged that Par promoted uses that were both unapproved and not covered by federal health care programs, causing false claims to those programs. The sales message, the patient’s condition and the use that qualifies for reimbursement are separate parts of that account. We examine how they fit together when assessing a pharmaceutical whistleblower case.

Elderly Nursing-Home Residents Became the Sales Target

The United States alleged that Par deliberately targeted elderly nursing-home residents with weight loss and launched a long-term-care sales force to reach them. That describes a decision about which patients would drive sales, carried into the organization of the sales team.

For someone who worked in that team, the important comparison is between the approved population and the population the company expected representatives to reach. A call plan aimed at nursing homes, the instructions given to representatives and the message delivered to providers can show how a commercial strategy reaches a patient. Those are the connections we would examine with an insider who knows the campaign.

The government also alleged that Par knew of adverse effects associated with megestrol acetate in elderly patients during the campaign. Its account identified increased risk of deep vein thrombosis, toxic reactions in elderly patients with impaired kidney function, and mortality. The elderly residents were the ones exposed to those risks, while taxpayers faced the bill for the allegedly noncovered uses.

The alleged mismatch went beyond a sales brochure. Par’s approved use identified a disease. Its alleged sales strategy identified a place to find elderly people losing weight.

A Superiority Claim Without the Studies

The government alleged that Par made unsubstantiated and misleading claims that Megace ES was superior to generic megestrol acetate for elderly patients. The purpose, according to the announcement, was to persuade providers to switch patients from the generic to Par’s product.

The missing scientific support was specific. The United States alleged that Par had conducted no well-controlled studies supporting greater efficacy for Megace ES.

For a medical-affairs or sales insider, the useful detail is the comparison actually made: which product, for which patients, and with what claimed advantage. We would compare that message with the studies offered to support it and the company’s instructions for using those studies. In this case, the government’s allegation joined the generic-switching pitch to the same elderly population targeted by the sales force.

The Whistleblower Actions Behind the Settlement

Par’s civil settlement resolved three qui tam lawsuits brought under the False Claims Act’s whistleblower provisions. The civil agreement required payment to the federal government and various states over the alleged noncovered promotion.

The announcement assigned a combined $4.4 million whistleblower award to two people who brought one of those actions. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The broader enforcement history shows how often that route matters. Public Citizen’s 2018 report, Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2017, found that whistleblower revelations were responsible, at least in part, for 54% of federal pharmaceutical settlements during the period it studied.

The same report describes earlier large off-label investigations as examining systematic company efforts to deceive physicians about drug safety or effectiveness. That focus helps explain why the organization of a sales team and the incentives its managers set matter alongside individual pitches.

The Agreement Changed What Sales Could Pay

Par agreed to a five-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. The controls reached sales compensation and executive bonuses.

The agreement prohibited compensation for sales representatives or their managers based on sales volume of Megace ES or any branded successor megestrol acetate drug. Including a successor mattered: the restriction followed the branded product beyond the name on the existing bottle. The control reached the manager’s compensation as well as the representative’s.

Par also had to change its executive compensation program so the company could recover annual bonuses from covered executives if they or their subordinates engaged in significant misconduct. These provisions addressed what the business rewarded, reaching from the sales force into executive pay.

An allegation in a separate case shows why that connection deserves attention. A whistleblower complaint against ISTA Pharmaceuticals alleged that the company organized off-label uses of Xibrom into sales categories called buckets. The complaint also alleged that representatives were encouraged to use part of their allotted budgets to print preoperative instruction sheets intended to induce off-label prescriptions. It quoted this company instruction:

That alleged instruction put the promoted use and the representative’s bonus in the same message. Par’s agreement addressed the incentive directly by removing sales-volume compensation for the named drug and its branded successors. The comparison gives an insider something concrete to recognize: the way a company turns a desired prescribing decision into a personal sales target.

How the Sales Message Reaches a Government Claim

A manufacturer’s promotional campaign can cause healthcare claims submitted by a pharmacy or a physician. The business selling the drug and the business billing for it occupy different places in the payment chain. Par’s civil settlement concerned the government’s allegation that promotion caused claims for noncovered uses to reach federal programs.

The claim connection can be unusually explicit in a company’s own sales material. In a separate whistleblower complaint against Endo Pharmaceuticals, the whistleblower alleged that Endo showed physicians how to write a Lidoderm prescription to avoid scrutiny from payers that would otherwise refuse reimbursement for the off-label use. That allegation located the reimbursement strategy inside the manufacturer’s promotional material.

For a pharmaceutical whistleblower, these cases point to different parts of the same inquiry. Sales personnel may know which patients management wanted to reach. Medical-affairs staff may know what supported the comparative claim. Reimbursement staff may know how the promoted use was presented for payment. We bring those accounts together around the company’s decisions and the claims they produced.

You Know What the Sales Team Was Told

If you saw the target list, the unsupported superiority pitch or the compensation plan behind a drug campaign, speak to one of our whistleblower experts about what the company wanted sold. We work with you to build your strongest pharmaceutical whistleblower case from the decisions you saw, bring in pharmaceutical fraud whistleblower lawyers who understand promotion and government reimbursement, and stay beside you throughout the case.