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Genentech Admits Illegal Marketing

April 15, 1999

SAN FRANCISCO (AP) _ Genentech Inc. will pay one of the largest-ever fines against a pharmaceutical company as part of a guilty plea for illegally marketing its growth hormone drug.

The Justice Department said Wednesday that the South San Francisco company will admit that from 1985 to 1994 it aggressively marketed the synthetic hormone Protropin for treating burns and a kidney disorder, even though those uses were not approved by the Food and Drug Administration. Genentech will also pay a $50 million fine.

If the judge approves the plea bargain, it would be the first time a pharmaceutical firm is found guilty of the criminal charge of promoting a drug for uses not approved by the FDA.

The FDA has also said that Protropin was being prescribed to children who were short but otherwise healthy.

In a separate statement, Genentech confirmed the plea but would only say it promoted the drug ``for medical uses that had not been approved by the (FDA).″ Genentech did not immediately return phone calls requesting information about the specific medical uses to which they were pleading guilty.

Growth hormone, the company’s first product, which was launched in 1985, was approved for sale to children suffering from a rare growth disorder called hypopituitary dwarfism.

Genetech’s Protoprin sales totaled more than $1.2 billion between 1985 and 1994. Sales of the drug, which last year were $214 million, have declined in recent years to due competition.

Questions were raised, however, about Genentech’s marketing tactics. A 1996 survey in the Journal of the American Medical Association found that 40 percent of patients were getting the drug for uses not approved by the FDA. Off-label use is legal, but drug makers may not promote it.

Government investigations also looked into allegations that Genentech gave kickbacks to doctors who were big prescribers. But that issue was not included in the settlement.

The illegal marketing practices were conducted under a different regime at Genentech. The company gained a reputation for aggressive marketing under its former chief executive officer, G. Kirk Raab. He was fired for financial improprieties in mid-1995, just as the federal probe began.

Federal officials said Genentech halted the illegal marketing in 1994 and has taken steps to reform its marketing.

``This insidious practice distorts medical judgments, boosts health care premiums and adds to the cost of taxpayer-supported government health care plans,″ said U.S. Attorney Robert Mueller.

About 30,000 children are treated with growth hormones in the United States yearly, but the American Academy of Pediatrics recommends only limited use, such as for children who have hormone deficiencies or a rare chromosomal abnormality.

The $50 million penalty was first announced by Genentech last Friday as a proposed settlement. It will consist of a $30 million criminal fine and a $20 million civil penalty.

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