Bloomberg News

Par Pharmaceutical to Appear in Court, Official Says

March 05, 2013

Par Pharmaceutical Inc., the generic-drug maker under criminal and civil investigation since 2008 over the marketing of its AIDS drug Megace ES, is scheduled to appear in federal court in New Jersey, a court official said.

Par will appear today in Newark before U.S. Magistrate Judge Madeline C. Arleo, according to courtroom deputy Marquis Whitney. In a filing yesterday, Par’s lawyers said the company is “close to finalizing” a “global resolution of several pending investigations and litigations.”

U.S. Attorney Paul Fishman will hold a news conference today at noon to announce “criminal and civil actions against a New Jersey company,” according to his spokesman, Matthew Reilly. Par, based in Woodcliff Lake, New Jersey, agreed in July to be acquired by TPG Capital for $1.9 billion.

Reilly declined to confirm that the conference involves Par. A voice-mail message to Par spokesman Stephen Mock wasn’t immediately returned.

Par sued the U.S. government in 2011, claiming the Food and Drug Administration violates First Amendment rights by making it a crime for manufacturers to discuss unapproved uses of approved drugs through “off-label promotion.” Doctors can prescribe drugs for any use, while companies can only promote them for FDA-approved uses. Companies have paid billions of dollars in fines and penalties for off-label marketing in the past decade.

“The ongoing threat of prosecution for alleged ‘off-label promotion’ based on Par’s truthful and non-misleading speech to healthcare professionals concerning the FDA-approved use of Par’s FDA-approved prescription drug currently chills Par’s speech,” Par claimed in federal court in Washington.

‘Global Resolution’

A filing by Par and the government last May asked to delay that lawsuit while the parties sought a “global resolution” of all investigations. Par sought such an accord in December 2010, according to the joint motion, and met “numerous times” with the government before suing in October 2011.

“In 2008, the government opened a parallel civil and criminal investigation of Par relating to the drug product (PRX:US) Megace ES to determine, among other things, whether Par committed any violations of the Federal Food, Drug and Cosmetic Act” or violated the U.S. False Claims Act, according to the motion.

Those signing the motion included lawyers for the FDA, the Justice Department’s Consumer Protection Branch and the U.S. Department of Health and Human Services.

In a filing in March 2012, Par sought the pretrial exchange of information, known as discovery, on various matters, including questioning FDA Associate Director Rachel Sherman.

‘Artfully Hedged’

Par sought to depose her about her “vague and artfully hedged” written declaration that “FDA does not consider Par’s on-label speech, ‘by itself,’ to be a crime, but only if there is no unspecified ‘additional evidence’ that an off-label use is intended,” according to the filing.

“These statements, which cannot be found in any FDA regulation or other official agency issuance, raise more questions than they answer,” according the filing.

Par claimed that “the First Amendment prohibits the government from irrationally criminalizing speech about a lawful and medically beneficial activity that the government subsidizes” through the Medicare and Medicaid programs.

The government had taken an “erroneous factual position that Medicare and Medicaid do not reimburse for off-label uses of Megace ES” except to treat “wasting” related to “certain, specific cancers,” according to the filing.

Prosecutor Meetings

In meetings in 2010, prosecutors in New Jersey asked Par about the promotion of Megace ES in oncology and long-term care settings, focusing on “how Par could legally promote” the drugs for AIDS “in those settings without first verifying the number of AIDS patients there,” Par’s lawyers wrote.

The filing also cited a June 2011 meeting in which a “senior DOJ official also indicated that promotion consisting of on-label speech that takes place in a setting where off-label use occurs is not protected by the First Amendment and, if Par believed otherwise, the issue would need to be litigated.”

The case is Par Pharmaceuticals Inc. v. U.S., 11-cv-01820, U.S. District Court, District of Columbia.

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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