Jazz Pharmaceuticals, Inc. (”Jazz”) has agreed to pay $20 million in order to resolve both criminal and civil investigations which were conducted by the United States Attorney’s Office for the Eastern District of New York. Specifically, Jazz Subsidiary Orphan Medical, Inc. plead guilty to the off label, illegal marketing of Xyrum (also known as “GHB”) and agreed to pay $17.2 Million in restitution and penalties. Both Jazz and Orphan were also to pay an additional $2.8 Million through a Civil Settlement Agreement.

The government’s investigation of the pharmaceutical fraud began as the result of a whistleblower lawsuit under the False Claims Act by a former sales representative for Orphan. Orphan engaged in a scheme to expand the market for Xyrum by marketing and promoting the drug to physicians for “off-label” use which included using a psychiatrist in promotional speaking engagements. The psychiatrist with the approval of Orphan sales personnel also showed physicians how to obtain reimbursement from Medicare and Medicaid for these unapproved uses. The criminal prosecution arose out of a criminal misbranding scheme by which physicians would write presciptions for Xyrum that were not reimburseable for Medicare and Medicaid.

“Pharmaceuticals manufactured under strict standards can still injure or kill if used for unapproved purposes. Here, the risk was not from willful abuse by users; it was from a concerted campaign by the manufacturer to push a drug for off-label uses. This posed a serious health risk and constitutes a serious crime,” said FBI Assistant Director-in-Charge, New York Field Office, Mark J. Mershon.
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