UPDATE 2-Forest Labs accused of kickbacks, illegal ads

Wed Feb 25, 2009 4:51pm EST

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(Adds sales data, detail from complaint, stock close)

WASHINGTON Feb 25 (Reuters) - The United States accused Forest Laboratories Inc (FRX.N) of inappropriately marketing the drugs Celexa and Lexapro for children and paying kickbacks like spa visits to pediatricians who prescribed the drugs, the Justice Department said on Wednesday.

Prosecutors said the antidepressant Celexa was no more effective than a placebo when taken by children or teenagers, and, in fact, more patients taking Celexa reported suicidal thoughts or attempted suicide.

The Food and Drug Administration approved Celexa to treat adult depression but refused to approve it for children, and required that Forest put a warning on the labels for Celexa Lexapro. The two are chemically similar.

Frank Murdolo, Forest Laboratory's vice president of investor relations, said that the company was working with the government in an investigation that dates to 2004.

"We've seen the release but that's all we've seen," he said. "We'll look at the complaint, see what's there. We'll see what the next steps are."

Lexapro is Forest's top-selling drug with sales of $585.5 million in the third quarter of fiscal 2009. Celexa lost patent protection and is no longer a major product for the company.

In the complaint, Forest is accused of pushing aside a study showing that Celexa was ineffective for pediatric use and instead urged its sales staff to promote a second, more positive study.

That promotion involved fishing trips, golf and spa outings as well as tickets for physicians to attend sporting events and the Broadway theater as well as meals at fine restaurants, the complaint said.

Some were also given cash for participating on advisory boards.

"Ostensibly, Forest paid physicians to attend these advisory boards to get their feedback on the marketing of Celexa and Lexapro," the complaint said. "In reality, as repeatedly reported in internal company documents, Forest intended that the advisory boards induce the attendees to prescribe more Celexa and Lexapro."

The Justice Department said those actions violated laws that forbid kickbacks.

"The United States alleges that federal health care programs have paid thousands of false and fraudulent claims for Celexa and Lexapro prescriptions that were not covered for off-label pediatric use and/or were ineligible for payment as a result of illegal kickbacks paid by Forest," the department said in a statement.

Forest's stock closed down $1.29, or 5.3 percent, at $23.14 on the New York Stock Exchange on Wednesday.

The government's lawsuit was unsealed in U.S. District Court in Massachusetts. It is civil action no. 03-10395-NMG and 05-10201-NMG. (Reporting by Diane Bartz; Editing by Gerald E. McCormick, Gary Hill)

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