NEW YORK (Reuters) - Amgen Inc pleaded guilty in a New York federal court on Tuesday for improper marketing practices involving its once top-selling Aranesp anemia drug, and prosecutors said the company has agreed to pay $762 million in a civil settlement and criminal fines.
The world’s largest biotechnology company had set aside funds it expected to have to pay as a result of federal and state investigations, as well as nearly a dozen civil whistleblower lawsuits.
Federal prosecutors said in court that the company had agreed to pay $612 million in a civil settlement, a $14 million criminal forfeiture payment, and a $136 million criminal fine.
Amgen entered the guilty plea to one misdemeanor count. Acting U.S. attorney Marshall Miller confirmed that under the agreement Amgen will not lose any federal business or contracts. Exclusion from federal programs, such as Medicare, could have crippled its business.
As part of the deal, Amgen will enter into a five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, prosecutors said. The agreement will require Amgen’s executives and members of its board of directors to certify compliance with applicable regulations, institute new transparency measures and put corporate officers “on the hook” for compliance failures within that five-year period, prosecutors said.
The plea agreement must be approved by U.S. District Judge Sterling Johnson. He has scheduled a hearing for Wednesday morning.
Aranesp, primarily used to treat anemia in cancer patients undergoing chemotherapy, remains one of Amgen’s largest drugs with sales of $2.3 billion in 2011. Its sales, and that of a related older red blood cell booster Epogen, have declined significantly over the past few years amid safety concerns, stricter usage guidelines and reimbursement restrictions.
Amgen was accused of promoting Aranesp for anemia caused by cancer, for which it was not approved, rather than to combat anemia as a side effect of chemotherapy treatments. The company was also accused of pushing higher doses and more convenient treatment schedules than what was approved in the drug’s label for both cancer and chronic kidney disease patients.
The government said the illegal practices were undertaken in part to help Amgen take market share from Johnson & Johnson’s similar anemia drug Procrit.
Amgen was “pursuing profits at the risk of patients’ safety,” Miller told reporters Tuesday after the plea hearing. He added that while the company “circumvented the FDA approval process,” the investigation had not uncovered any evidence of fraudulent intent on Amgen’s part.
Federal prosecutors declined to comment further on the civil portion of the settlement, which they said is still under seal.
A spokeswoman for the company, based in Thousand Oaks, California, said that if the judge accepts the criminal plea tomorrow, “Amgen expects immediately thereafter to complete the comprehensive resolution of related civil and criminal matters,” for which it had previously recorded a $780 million charge in the third quarter of 2011.
In a recent regulatory filing with the U.S. Securities and Exchange Commission, Amgen said it had accrued $806 million related to the proposed settlement of charges arising out of the federal civil and criminal investigations.
Amgen shares were down 14 cents at $89.36 in late morning trading on the New York Stock Exchange.
Additional reporting and writing by Bill Berkrot and Caroline Humer; Editing by Lisa Von Ahn, Andrew Hay and David Gregorio