Nationwide Scheme Also Sought Unlawful Reimbursements from Public and Private Health Insurers

An indictment was returned today in U.S. District Court in Brooklyn, New York, charging the defendant PETER GLEASON, a psychiatrist, with federal crimes arising from his participation in a nationwide scheme to unlawfully promote the medication Xyrem, also known as sodium oxybate and gamma-hydroxybutyrate (“GHB”), to prescribing physicians for non-approved medical purposes and concealing those purposes from health insurers.¹ The indictment further alleges that the defendant was paid tens of thousands of dollars by Xyrem’s manufacturer in furtherance of this scheme. Specifically, GLEASON was charged with introducing a misbranded drug into interstate commerce, health care fraud, and conspiracy to commit those offenses.

The indictment was announced by ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, KIM A. RICE, Special Agent-in-Charge, U.S. Food and Drug Administration, Office of Criminal Investigations, Washington Metro Field Office, and MARK J. MERSHON, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and is the culmination of a year-long undercover investigation that included the use of a cooperating witness who recorded his conversations with GLEASON, as well as GLEASON’s presentations to prescribing physicians at continuing education programs and promotional events sponsored by Xyrem’s manufacturer.

According to the indictment, the active ingredient in Xyrem is GHB, a powerful and fast-acting central nervous system depressant that has been subject to abuse as a recreational drug and is classified by the federal government as a “date rape” drug. Xyrem is capable of inducing sleep very quickly and causing serious side effects, including difficulty breathing while asleep, confusion, abnormal thinking, depression, nausea, vomiting, dizziness, headache, bedwetting, and sleepwalking. Abuse of the drug can cause additional serious medical problems, including seizures, coma, and death, and can also lead to dependence and severe withdrawal symptoms. Xyrem’s dangers are set forth in a “black box” warning, which is the most serious warning placed in the labeling of a prescription medication.

Federal law makes it a crime for anyone to introduce a drug into interstate commerce for a medical use or “indication” that is not approved by the U.S. Food and Drug Administration (“FDA”). According to the indictment, Xyrem is only approved for two medical indications, the treatment of cataplexy, a condition characterized by weak or paralyzed muscles associated with the sleep disorder known as narcolepsy, and the treatment of excessive daytime sleepiness (“EDS”) in narcolepsy patients. The indictment charges GLEASON with conspiring with employees of Xyrem’s manufacturer to market Xyrem for a range of unapproved or “off-label” indications, including fatigue, chronic pain, weight loss, EDS not associated with narcolepsy, depression, bipolar disorders, fibromyalgia (a disorder causing muscle pain and fatigue), insomnia, and movement disorders such as Parkinson’s disease.

As alleged in the indictment and a previously filed complaint, Xyrem’s manufacturer, Orphan Medical, Inc. (“Orphan”), relied on GLEASON to give lectures around the country promoting Xyrem to physicians for “off-label” indications and paid GLEASON tens of thousands of dollars for such speaking engagements. In 2004 alone, GLEASON spoke at over 100 events and was paid more than $70,000. GLEASON was allegedly in high demand by Orphan sales representatives because of his proven ability to generate “off-label” sales of Xyrem in their respective sales territories. The indictment charges that GLEASON engaged in deceptive and misleading behavior in promoting Xyrem by, among other things, suggesting to physicians that GHB was not a “date rape” drug, and that Xyrem was safe for very young children when, in fact, the drug’s labeling stated that Xyrem had not been proven safe and effective for people under the age of 16. The indictment also charges that GLEASON conspired with Orphan employees to defraud public and private health insurance plans by concealing, and advising prescribing physicians to conceal, evidence that Xyrem prescriptions were being filled for “off-label” indications that generally were not reimbursable.

“Illegal marketing of prescription medications for unauthorized medical uses is a serious and increasingly widespread crime that we are committed to prosecuting,” stated United States Attorney MAUSKOPF. “This case is particularly troubling, not only because it involves the marketing of a medication containing GHB, a dangerous substance with a long history of abuse, but because those marketing activities were furthered by a psychiatrist who, for financial gain, willingly used his professional status to promote the use of the medication at the expense of patient health and to urge other physicians to conceal those unauthorized uses from health insurers.” Ms. MAUSKOPF thanked the Department of Health and Human Services, Office of Inspector General, for its assistance in this matter and emphasized that the investigation is continuing.

FDA Special Agent-in-Charge RICE stated, “The FDA does not tolerate the marketing of products that use deceptive and untruthful claims to lure consumers into potentially dangerous situations.”

FBI Assistant Director-in-Charge MERSHON stated, “Apparently motivated solely by greed, someone whose moral and professional obligation was patient well-being engaged in a pattern of promoting unproven and even unsafe uses of a potentially dangerous drug. That a psychiatrist would engage in conduct indistinguishable from a carnival snake-oil salesman is appalling.”

 If convicted, GLEASON faces the following maximum sentence: conspiracy to introduce a misbranded drug into interstate commerce -- five years incarceration, conspiracy to commit health care fraud -- 10 years incarceration, introducing a misbranded drug into interstate commerce -- three years incarceration, and health care fraud -- 10 years incarceration. On each count of conviction the defendant also faces a maximum fine of $250,000. In addition, the indictment seeks a forfeiture judgment against the defendant of any and all property constituting or derived from proceeds traceable to his offenses.

The government’s case is being prosecuted by Assistant United States Attorneys Geoffrey Kaiser, Paul Kaufman, and Margot Schoenborn.

The Defendant:

PETER GLEASON
DOB:  4/1/1953

 

 

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¹  The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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