Aliso Viejo, CA-based pharmaceutical company Avanir has agreed to pay $96 million to resolve federal False Claims Act allegations that it paid kickbacks and marketed the drug Nuedexta in long-term care communities for the off-label use of treating behaviors associated with dementia.

The company also will pay an additional $7 million to resolve state Medicaid claims.

“We are pleased to resolve this matter, move forward and continue to develop innovative central nervous system treatments that improve the lives of patients and their care communities,” Avanir President and CEO Wa’el Hashad said Thursday.

Nuedexta (dextromethorphan HBr and quinidine sulfate) is approved by the Food and Drug Administration to treat pseudobulbar affect, not dementia behaviors. Although physicians sometimes prescribe medication for off-label uses, marketing drugs for off-label purposes is prohibited.

“Avanir sought to capitalize on efforts by the Centers for Medicare & Medicaid Services to reduce the use of antipsychotics on dementia patients in LTC facilities, based in part on CMS’s concern that antipsychotics can be and have been used as a form of chemical restraint for residents,” the Justice Department said Thursday in announcing the settlement.

Nuedexta was promoted across the country for off-label uses to assisted living facilities, nursing homes and psychiatric treatment centers, according to attorneys representing the “whistleblower” former employees who brought the claim. Under Avanir’s strategy, the use of the medication in long-term care facilities increased, according to the federal government.

“In one example of the impact of these strategies, the government alleged that an Avanir employee reported that one doctor, who was also a paid speaker for Nuedexta, had ‘entire units’ of patients on Nuedexta at the LTC facility where he worked, which contained a large number of dementia patients with behavioral issues,” the Justice Department said. “And while another doctor, a geriatrician who also worked in the same LTC facility, routinely discontinued Nuedexta for patients, the doctor paid by Avanir ‘constantly re-initiat[ed]’ the treatment.”

The federal government also had alleged that the drug company, between October 2010 and December 2016, gave money, honoraria, travel and food to some physicians and other healthcare professionals to induce them to write prescriptions for Nuedexta. One form of remuneration included payments for certain healthcare professionals to give talks about Nuedexta, although these events primarily were social, not educational, the department said.

As part of resolving the claim, Avanir entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. Under the terms, the drug company will be required to implement additional controls related to its interactions with physicians and monitor promotional and other activities. Board members and “key executives” also will be required to obtain compliance-related certifications, the department said.

The civil settlement resolves the whistleblower lawsuits filed by three former employees of Avanir. They will share $17.8 million of the settlement, the Justice Department said.

“Avanir fully cooperated with the U.S. government throughout the investigation and engaged in extensive remedial measures. The individuals listed in the resolution agreements are no longer Avanir employees,” the company said in a statement.

“The company takes its responsibilities to patients, their families and caregivers, and healthcare providers very seriously,” Hashad said. “Avanir is deeply committed to regulatory and legal compliance, integrity and ethical behavior, and the health and safety of patients. Strengthening our culture of compliance has been one of my top priorities since I joined Avanir in 2017. We will ensure that our mission, vision, and values are upheld at every level of our company every day.”

Additional cases

In a separate case announced by the federal government, the pharmaceutical company also agreed to pay a $7.8 million penalty and forfeit $5 million for paying a Georgia physician to increase the number of Nuedexta prescriptions he wrote.

Additionally, the Justice Department announced an 83-count indictment naming two former Avanir employees and two physicians in Ohio allegedly involved in a kickback scheme involving Nuedexta. “Avanir has agreed to cooperate in the prosecution of these individuals,” the department said.