Skip to main content
Press Release

Pharmaceutical Companies To Pay $67 Million To Resolve False Claims Act Allegations Relating To Tarceva

For Immediate Release
U.S. Attorney's Office, Northern District of California

SAN FRANCISCO- Pharmaceutical companies Genentech, Inc. and OSI Pharmaceuticals, LLC will pay $67 million to resolve False Claims Act allegations that Genentech and OSI Pharmaceuticals, Inc. made misleading statements about the effectiveness of the drug Tarceva to treat non-small cell lung cancer.  The announcement was made today by United States Attorney Brian J. Stretch; Principal Deputy Assistant U.S. Attorney General Benjamin C. Mizer; Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General Steven Ryan; and Howard R. Sklamberg, the Federal Food and Drug Administration’s Deputy Commissioner for Global Regulatory Operations and Policy. 

Genentech, located in South San Francisco, California, and OSI Pharmaceuticals, located in Farmingdale, New York, co-promote Tarceva, which is approved to treat certain patients with non-small cell lung cancer or pancreatic cancer.  OSI Pharmaceuticals LLC is the successor to OSI Pharmaceuticals Inc., which was acquired by Astellas Holding US Inc. in 2010 and converted to a limited liability company in 2011.  The settlement resolves allegations that, between January 2006 and December 2011, Genentech and OSI Pharmaceuticals made misleading representations to physicians and other health care providers about the effectiveness of Tarceva to treat certain patients with non-small cell lung cancer, when there was little evidence to show that Tarceva was effective to treat those patients unless they had never smoked or had a mutation in their epidermal growth factor receptor, which is a protein involved in the growth and spread of cancer cells.

As a result of today’s $67 million settlement, the federal government will receive $62.6 million and state Medicaid programs will receive $4.4 million.  The Medicaid program is funded jointly by the state and federal governments.

“This settlement demonstrates the government’s unwavering commitment to pursue violations of the False Claims Act and recover taxpayer dollars spent as a result of misleading marketing campaigns,” said U.S. Attorney Brian Stretch for the Northern District of California.

“Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will hold those companies accountable that mislead the public about the efficacy of their products.”

“Pharmaceutical companies that make misleading or unsubstantiated statements about their products can put patients at risk,” said Deputy Commissioner Howard R. Sklamberg for FDA’s global regulatory operations and policy. “The FDA will continue to work to protect the public's health by ensuring that companies do not mislead healthcare providers about their products.”

“Drug manufacturers that make misleading claims about their product’s effectiveness can jeopardize the health of patients -- in this case, cancer patients,” said Special Agent in Charge Steven J. Ryan for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency will continue to protect both patients and taxpayers by holding those who engage in such practices accountable for their actions.”

The settlement resolves allegations filed in a lawsuit by former Genentech employee Brian Shields, in federal court in San Francisco.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  Shields will receive approximately $10 million.  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $29.8 billion through False Claims Act cases, with more than $18.2 billion of that amount recovered in cases involving fraud against federal health care programs.       

Assistant U.S. Attorney Ila C. Deiss and U.S. Department of Justice Civil Division Trial Attorney Jennifer Cihon handled the case with the assistance of Paralegal Jonathan Birch. The settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with assistance from the HHS-OIG, the HHS Office of Counsel to the Inspector General, the HHS Office of the General Counsel-CMS Division, the FDA’s Office of Chief Counsel, the FDA’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the FBI, the Department of Defense Office of the Inspector General, the Office of the General Counsel for the Defense Health Agency and the National Association of Medicaid Fraud Control Units.      

Updated September 28, 2016

Health Care Fraud