Galena Biopharma to Pay $7.5 Million to Settle False Claims Charge

Galena Biopharma will pay more than $7.55 million to resolve allegations that it paid kickbacks to doctors to induce them to prescribe its fentanyl-based drug Abstral.

The allegations rose from a whistleblower suit filed under the False Claims Act.

“Given the dangers associated with opioids such as Abstral, it is imperative that prescriptions be based on a patient’s medical need rather than a doctor’s financial interests,” said Justice Department official Chad Readler said. “The Department of Justice intends to vigorously pursue those who offer and receive illegal inducements that undermine the integrity of government health care programs.”

Federal officials alleged that Galena Biopharma paid multiple types of kickbacks to induce doctors to prescribe Abstral, including providing more than 85 free meals to doctors and staff from a single, high-prescribing practice, paying doctors $5,000 honoraria, and speakers $6,000, plus expenses, to attend an “advisory board” that was partly planned, and was attended by, Galena sales team members; and paying approximately $92,000 to a physician-owned pharmacy under a performance-based rebate agreement to induce the owners to prescribe Abstral.

Federal officials alleged that Galena paid doctors to refer patients to the company’s Relief patient registry study, which was nominally designed to collect data on patient experiences with Abstral, but acted as a means to induce the doctors to prescribe Abstral.

Galena Biopharma sold Abstral in November 2015 after booking net losses on Abstral in each year that it owned the drug, beginning in June 2013. During that period, Medicare, TRICARE, and the Federal Employees Health Benefits program paid $13.6 million for Abstral prescriptions.

The settlement resolves Galena’s civil liability for causing false claims to be submitted to these programs.

Galena Biopharma has not marketed any pharmaceutical drug since the end of 2015. It currently has a market capitalization of roughly $21 million.

The settlement resolves a lawsuit filed by relator Lynne Dougherty under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States and obtain a portion of the government’s recovery.

As part of the resolution, Dougherty will receive more than $1.2 million.

The matter remains under seal as to allegations against entities other than Galena.


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