DUSA Pharmaceuticals, a subsidiary of Sun Pharmaceuticals Industries (Sun Pharma), agreed to pay $20.75 million to the United States government to settle allegations that it violated the False Claims Act.

The settlement will resolve a lawsuit filed under the whistleblower provision of the False Claims Act. The law allows private parties to sue on behalf of the United States for false claims and receive a portion of the federal government’s recovery.

An individual named Aaron Chung, a former sales representative of DUSA Pharmaceuticals filed a civil lawsuit on behalf of the federal government. He will receive approximately $3.5 million as his share of the settlement amount.

As part of the settlement, DUSA Pharmaceuticals and Sun Pharma also entered into a Corporate Integrity Agreement with the Department of Health and Human Services (HHS) Office of the Inspector General (OIG). Under the agreement, the companies are required to establish and maintain a Compliance Program to ensure that both pharmaceutical companies comply with the statutes, regulations, and written directives of Medicare, Medicaid, FDA, and all other federal health care programs.

Allegations against DUSA Pharmaceuticals

According to the U.S. Department of Justice (DOJ), Dusa Pharmaceuticals and Sun Pharma encouraged physicians to submit false claims to the Medicare and the Federal Employee Health Benefits Program.

DUSA Pharmaceuticals did so by knowingly promoting an administration process that contradicted the product instructions approved by the Food and Drug Administration (FDA) for Levulan Kerastick.  The administration process it promoted was also unsupported by sufficient clinical evidence.

Levulan Kerastick is an FDA-approved prescription topical solution for the treatment of minimally to moderately thick actinic keratosis (AKs) of the face or scalp.

The FDA’s approved instructions under the drug’s “Dosage Administration” section described a two-stage process involving the application of the topical solution to the target lesions and then, following an incubation period of 14 to hours, illumination of the target lesion with blue light.

The federal government alleged that the senior management of Dusa Pharmaceuticals and Sun Pharma knew that the administration of Levulan Kerastick for short incubation periods ranging from one to three hours resulted in clearance rates shorter than those achieved in clinical trials using 14 to 18 hours incubation.

DUSA Pharmaceuticals allegedly encouraged physicians to use the less effective short incubation periods by using paid physician speaker programs and paid physician peer-to-peer discussions, disseminating incomplete or misleading responses to questions from prescribing doctors, among other tactics.

Additionally, the federal government alleged that DUSA Pharmaceuticals failed to disclose to physicians that the administration of Levulan Kerastick using short incubation resulted in significantly lower AK clearance rates than the FDA-approved longer incubation.

In a statement, DOJ Civil Division Acting Assistant Attorney Ethan Davis said, “The department is committed to protecting taxpayer-supported health care programs from fraud and abuse. We will hold drug manufacturers accountable when they knowingly promote ineffective uses of their products that undermine patient care or waste program funds.”

On the other hand, HHS OIG Special Agent in Charge Steven Ryan commented, “Drugmakers that push the inappropriate use of their products undermine the health of patients and the financial integrity of federal health care programs. Our oversight agency, working closely with our law enforcement partners, will continue to thoroughly investigate those who engage in such schemes.”

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