Cell Therapeutics discloses probe info
By Benjamin J. Romano
Seattle Times business reporter
A whistle-blower may be aiding a government investigation into whether Cell Therapeutics unlawfully promoted a drug for unapproved uses.
In its annual report filed with the Securities and Exchange Commission on Thursday, the Seattle company disclosed that a "private party" has made claims against it "under seal on behalf of the government."
That could indicate that a whistle-blower who may have independent knowledge of fraud against the government has stepped forward, said Stephen Meagher, a San Francisco attorney who represents corporate whistle-blowers in health-care cases. The whistle-blower can receive a portion of damages recovered by the government under the federal False Claims Act.
Cell Therapeutics first said last summer the U.S. Attorney's Office was investigating its business practices related to Trisenox, a drug approved by the Food and Drug Administration for a rare form of leukemia. The drug, which it sold in July to Cephalon, generated sales of $81 million since 2000.
While Cell Therapeutics owned Trisenox, it was prescribed by doctors "largely for uses not approved by the FDA," the company has said. Doctors can and frequently do write prescriptions for so-called off-label uses, but it's against the law for drug companies to promote off-label prescribing.
Investigators are examining Cell Therapeutics' promotion practices, revenue reporting and statements made by company representatives and consultants regarding Medicare reimbursement for off-label uses of Trisenox, according to regulatory filings.
The government can collect damages from pharmaceutical companies for Medicare-reimbursed prescriptions that were promoted unlawfully, Meagher said.
Cell Therapeutics said it's cooperating with the investigation. The U.S. Attorney's Office in Seattle had no comment.
The assistance of a whistle-blower — who could be anyone, including a competitor, physician or former employee — is often critical to making this kind of case. There's a fine line between what drug companies can and cannot do.
John Mack, publisher of Pharma Marketing News, said drug companies can legally give physicians information about off-label uses for their products, provided the physicians ask for it. But if the drug company's sales representative induces the doctor to ask for the information, that's considered off-label promotion.
"That's where whistle-blowers come in [as] one of the main sources of incriminating evidence," he said.
Off-label marketing is widely practiced in the pharmaceutical industry; there are even conferences on the subject, Mack said. But some techniques, such as kickbacks in the guise of educational grants for doctors who do off-label prescribing, are more egregious than others, he said.
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