Medical Device Maker, Investment Firm Settle Whistleblower Lawsuit for $11.5M

A whistleblower lawsuit alleging that Therakos Inc. violated the False Claims Act by marketing a cancer treatment for uses not approved by the U.S. Food and Drug Administration has been settled for $11.5 million.

The lawsuit was initially brought by two former Therakos Inc. employees in 2012. They will now split more than $2.75 million. The law permits whistleblowers to file a lawsuit on behalf of the government and report fraud against the government. If the government decides to intervene and there is a settlement, whistleblowers are rewarded with a portion of that settlement.

According to a news release by the U.S. Department of Justice, Medical Device Business Services, a subsidiary of Johnson & Johnson, will pay $10 million to resolve the allegations, while another $1.5 million will be paid out by investment firm The Gores Group, which purchased Therakos in 2012. The government alleged that the investment firm continued its questionable marketing practice after the purchase.

The settlement centers around allegations that between 2006 and 2015 Therakos improperly marketed and promoted to the pediatric population its ECP systems for the treatment of cutaneous T-cell lymphoma, in which cancerous T-cells migrate to the surface of the skin, causing lesions.

Therakos’s ECP drug/device systems administer the medication UVADEX (methoxsalen) by first removing a portion of the patient’s blood and separating the red blood cells from the white blood cells by using a centrifuge. The red cells are returned to the patient and the UVADEX solution is combined with the white cells. The device then irradiates the drug-cell mixture with ultraviolet light and returns the treated cells to the patient.

The U.S. Food and Drug Administration approved UVADEX in 1999. In that approval, the FDA noted that “safety in children has not been established†and that there were potential hazards of long-term therapy including the possibility “of carcinogenicity and cataractogenicity.â€

At no time was the treatment approved by the FDA for use in children. The government alleged that marketing the product for non-approved use caused false claims to be submitted to Medicaid, the Federal Employee Health Benefits Program and TRICARE.

Neither J&J nor The Gores Group admitted wrongdoing as part of the civil settlement. The Gores Group sold Therakos in 2015 to Mallinckrodt Pharmaceuticals, a publicly traded company based in New Jersey.

The case is U.S. ex rel. Johnson, et al, v. Therakos Inc, et al, U.S. District Court, Eastern District of Pennsylvania, No. 12-cv-1454.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action. For more information give us a call at 05-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.