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Amgen to Pay $150M in Fines, Forfeiture; More to Come

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By Mari Serebrov

Washington Editor

Amgen Inc. began to close the book Tuesday on several federal investigations and whistleblower suits involving its marketing practices when it pleaded guilty in federal district court to a misdemeanor charge of off-label marketing of Aranesp, which posted global sales of $2.3 billion in 2011.

To end the criminal case, the Thousand Oaks, Calif.-based company agreed to pay $150 million in fines and forfeiture. Amgen also will enter into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. That agreement will put corporate executives and board members on the hook should future violations occur, said Marshall Miller, acting U.S. attorney for the Eastern District of New York.

The judge is expected to accept the plea agreement at a sentencing proceeding Wednesday.

The charge stemmed from the marketing of Aranesp (darbepoetin alfa) at much higher dosages/less frequent administration than what the FDA had approved, Miller said in a media briefing. He claimed the company touted the convenience of monthly dosing over twice-monthly dosing for kidney patients and every-other-week dosing vs. weekly dosing for cancer patients – even though the FDA had refused to approve those regimens and the higher dosages they required.

Amgen also promoted the use of Aranesp for an indication not approved by the FDA, Miller said, adding that the agency found that the use of the drug in that undisclosed patient population led to an increased risk of death.

Federal investigators didn't have sufficient evidence to charge any individuals at Amgen with the off-label promotion, Miller said, so the company was charged instead. But if Amgen were to engage in similar marketing practices in the future, corporate officials would be held accountable under the corporate integrity agreement, which requires them to certify compliance, he warned.

While the settlement ends the federal criminal investigations, it doesn't address a number of civil cases, including several whistleblower suits, which will be resolved under a separate civil settlement. Miller declined to comment on that settlement, but it could exceed $600 million, given disclosures Amgen made in its 2011 third-quarter report.

Saying it had reached an agreement in principle on the federal investigations, related state Medicaid claims and the whistleblower suits, Amgen recorded a $780 million charge for last year's third quarter, reducing its net income by $705 million, according to the company's SEC filing for the quarter.

The civil agreement is expected to settle 10 whistleblower suits, as well as claims made in U.S. ex rel. Westmoreland v. Amgen, et al. One of the whistleblower cases, a sealed suit Amgen said it became aware of during settlement talks, alleges that the company's marketing of Enbrel (etanercept) led to the submission of various false claims in violation of the Federal Civil False Claims Act and various state false claims acts. (Enbrel had $3.7 billion in global 2011 sales.)

Also during the settlement talks, Amgen learned it had been named in four other whistleblower actions. It has been dismissed from two of them, according to the company's most recent quarterly filing, and it has reached an agreement in principle in a third one, accruing an "immaterial amount" in the third quarter of 2012 for that settlement.

The final action, which remains under seal, alleges that Amgen's marketing of Aranesp, Neupogen, Neulasta, Xgeva, Prolia, Vectibix and Nplate resulted in various false claims being submitted. Amgen said in the recent SEC filing that it is working with the government in its investigation of the allegations.

Since the company revealed last year that it had reached an agreement in principle, Tuesday's news had little impact on Amgen's shares (NASDAQ:AMGN), which were down 21 cents, closing at $89.29.