Dec. 15, 2010, 7:30 p.m. EST

Elan, Eisai to Pay $214 Million to U.S.

By Brent Kendall

WASHINGTON—The U.S. arms of drug companies Elan Corp. and Eisai (TKS:JP:4523) Co. will pay $214 million to resolve allegations that they illegally promoted the epilepsy drug Zonegran, the U.S. Justice Department said Wednesday.

Elan, of Dublin, Ireland, will pay $203 million, the bulk of the settlement. The company's U.S. subsidiary, Elan Pharmaceuticals Inc., has agreed to plead guilty to a misdemeanor criminal charge of misbranding the drug. Elan announced earlier this year that it had set aside the money to cover the settlement.

The Justice Department alleged that Elan promoted Zonegran for a wide variety of uses not approved by the Food and Drug Administration, including mood stabilization, migraine and chronic headaches, weight loss and seizures.

Elan's efforts targeted non-epilepsy prescribers and the company paid illegal kickbacks to physicians in an effort to persuade them to prescribe the drug for so-called off-label uses, the department alleged.

The department said Eisai purchased the drug from Elan and also promoted it for non-approved uses. The company, a unit of Japan's Eisai Co., will pay $11 million.

"Off-label promotion of pharmaceutical products undermines the FDA's important role in protecting the American public by determining whether a drug is safe and effective for a particular use before it is marketed," U.S. Assistant Attorney General Tony West said in a statement. "Such illegal conduct by pharmaceutical companies also costs the government billions of dollars, and these civil settlements and the criminal plea agreement by Elan demonstrate that such conduct will not be tolerated."

Elan's general counsel, John Moriarty Jr. , said in a statement that the settlement "concludes a longstanding legal matter on a product Elan divested over six years ago."

"Elan is committed to adhering to the highest ethical and legal standards and has developed a strong compliance program based upon best industry practices," he said.

An Eisai spokeswoman did not immediately respond to a request for comment.

Write to Brent Kendall at brent.kendall@dowjones.com

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