ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges

Pharmaceutical company ISTA Pharmaceuticals has pled guilty to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Justice Department announced in a press release.  The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution, and sale of its drug Xibrom. 

According to the Justice Department, ISTA conspired to introduce misbranded Xibrom into interstate commerce to expand sales of Xibrom outside of its approved use. Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery. Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. The Justice Department has evidence that shows that continuing medical education programs were used to promote Xibrom for uses that were not approved by FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by FDA. 

ISTA pled guilty to a felony based on evidence that ISTA management instructed some employees not to put in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses. ISTA agreed that this conduct represented an intent to defraud under the law.

In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offer or pay remuneration to physicians to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute.  ISTA directed certain ISTA employees to offer and provid physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.  ISTA also provided illegal remuneration and sponsored events and marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.

Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge. 

ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government healthcare programs.  The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by Federal healthcare programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma.  The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal healthcare programs.  The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84.  

"As today's global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division, in the press release.  "Healthcare fraud in any form undermines the integrity of our healthcare system and can drive up costs for all of us."