Drugmaker paying $37 million for off-label marketing

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Drugmaker InterMune Inc. agreed Thursday to pay $37 million to settle charges it promoted a drug to treat a fatal lung disease even though it was approved for a different ailment and its own studies didn't show it was effective.

The drug Actimmune is approved by the Food and Drug Administration to treat an immune system disorder and a bone disease but was often prescribed off-label to treat a lung-scarring condition known as Idiopathic Pulmonary Fibrosis.

Federal authorities said the vast majority of Actimmune sales between August 2002 and January 2003 were for treating IPF, a disease afflicting 83,000 Americans in which there is no FDA-approved treatment.

"It is vital to public health and safety that pharmaceutical companies are deterred from improperly marketing their drugs to doctors and patients to treat illnesses that these drugs are not approved to treat," said Peter Keisler, an assistant U.S. attorney general.

Authorities said clinical trials between 2000 and 2002 failed to statically show that the drug slowed the progression of the lung disease or increased patient survival.

The company characterized the study as reducing mortality rates by 70 percent of patients with mild or moderate IPF and encouraged Actimmune sales associates to inform physicians that the drug worked for IPF, prosecutors said. The characterization was disseminated to thousands of patients and pulmonologists.

Under terms of the deal, federal authorities could prosecute the Brisbane-based company for allegedly violating the Food, Drug and Cosmetic Act if it doesn't alter its promotional tactics. The deal also requires the company to maintain written policies about complying with federal rules about sales and marketing and to assist federal authorities with their investigation.

"We now put this matter behind us and we will focus our resources on what we believe is a promising future for our company and our shareholders," said Dan Welch, InterMune's president and chief executive.

The settlement came as the company announced it had lost $29 million, or 88 cents a share, in the third quarter compared with a loss of $24 million, or 74 cents per share, in the same period in 2005. The company blamed the widening loss in part on the government settlement.

The quarterly loss includes a $6.9 million charge related to the agreement, which is to be paid over five years.

The company's share price fell 3 cents to $22.93 at the close of trading on the Nasdaq Stock Market.

The case is United States v. InterMune Inc., 06-0707.

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