CSI? Naw, Just Pharmaceuticals… Pharmaceutical Sales Rep Turns Whistleblower


CSI?  Naw, Just Pharmaceuticals… Pharmaceutical Sales Rep Turns Whistleblower

She makes an unlikely FBI agent.

At 44 years old, it is guaranteed that Ms. Ryan never pictured herself going undercover in order to investigate illegal marketing of the pain patches sold by her employer, Endo Health Solutions.  It is almost assured that she never pictured herself receiving more than two and a half million dollars as a payout for aiding the FBI in an investigation of Endo.

But stranger things have happened.

She wore wiretaps to work, leading a double life and acting as an informant for the Federal Bureau of Investigations for nearly ten years.

The case recently culminated in her employer entering into an agreement for deferred prosecution with the Department of Justice earlier this year.

Ryan was recently ruled, by the judge on the case, to be the sole whistleblower involved in the investigation that would be entitled to a portion of the large settlement between the company and the government.

Ryan accused Endo of illegally marketing its Lidoderm “pain patch” and filing false Medicare claims. The government joined the whistleblower’s lawsuit she filed in 2005. And Endo agreed to a $193 million settlement, saving U.S. taxpayers tens of millions of dollars.

Lidoderm was originally approved by the Food and Drug Administration to treat a little known condition related to shingles.

Unhappy with sales, the management of the company began urging sales people to push the “off label” uses for the product.  They began selling the patches for nearly every type of pain imaginable…and to great effect.

In 2005, Ms. Ryan attended a meeting of the sales staff where managers told sales reps that they had discovered a ‘loop hole’ in the FDA ruling on the product that would allow the company to mass market the patches for other uses.

Ms. Ryan felt the need to do what she could to put a stop to what she believed to be unfair business practices and perhaps illegal behavior.

Peggy Ryan began her career in pharmaceutical sales after graduating from Xavier University with a degree in mortuary sciences.  Initially working for Johnson & Johnson, then for Pharmacia, she ended up at Endo in 2002.

In 2005 at the aforementioned sales meeting she realized the Endo was “gaming the system.”  “I didn’t feel comfortable selling this way,” she said.

The Food and Drug Administration had approved the patch for only one relatively rare complication related to the shingles virus. But the district manager encouraged the sales force to sell it for all kinds of “off-label” uses. The company even adopted the marketing slogan: “Put the patch where the pain is.”

Ryan uncovered an internal document that showed 95% of Endo’s Lidoderm patch sales were for off-label uses. Endo had taken a single drug approved for an obscure ailment and started selling to for almost every kind of pain.

The result was tens of millions of dollars being falsely billed to the government, and patients taking drugs that put them at risk, government officials have said.

But even though Ryan is now facing a potentially huge payout, this was not always guaranteed, nor even contemplated.  She was never assured that the government would join her case, that the case would ultimately end up settling, nor that she would even be considered important enough in the investigation to be considered for a portion of the settlement.  In the meantime, she had placed her entire career on the line.

“Do not file a case because you think you’re going to be a multimillionaire afterward,” Ryan said in a telephone interview with the Wall Street Journal. “You have to follow your heart of hearts.”

Ryan said that she wasn’t pursuing the big payout.  She felt morally obligated to stop a large company from defrauding the government and the taxpayers and putting patients at risk by enticing them to use a drug for purposes for which it was not intended.  She felt that her duty to the government, the people and patients worldwide was more important than her commissions.

“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “We will hold accountable those who circumvent that process in pursuit of financial gain.”

Ryan was relieved when the DOJ stepped up and took over the case.

The Department filed a criminal complaint in the Northern District of New York, and charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA).

The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA.   Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses.

During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles.   The government alleged that, during the relevant time period, the Lidoderm, distributed nationwide by Endo Pharmaceuticals Inc., was misbranded because its labeling included directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome.

These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA.   It was further alleged that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.

“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian in announcing Endo’s deferred prosecution agreement.

The settlement was such a long time coming Ryan wondered if the case would ever end.

She recalled driving with her supervisor to physician’s practices, recording conversations along the way about how to pitch Lidoderm for all kinds of pains for which it was never approved.

“It was very stressful,” she said. “I was constantly wondering, does anyone know that I’m recording?”

She worried she’d be caught and blacklisted from the industry before she could make her case.

“Legally, I don’t think they can do anything outright,” she said. “But they have a wonderful way of managing you out. They could make things very uncomfortable.”

In the end, Ryan and the Department of Justice won out in this case.  Unfortunately, there are many other instances of fraud that go undetected.  The pharmaceutical industry is rife with illegal and fraudulent practices just waiting for some morally upright employee to take charge of the situation and step up to put a stop to them.

These fraudulent practices are one reason drug prices are skyrocketing.

“It was the right thing to do,” said Ryan, who finally parted ways with Endo in November 2012. “I hope others come forward when they recognize wrongdoing.”

If you have information about possible fraudulent or illegal activity on the part of your employer and would like to discuss a potential whistleblower case, contact Stephen Danzq & Associates, California’s premiere whistleblower attorneys, at (877) 789-9707 or use the Contact Form on our website to schedule a free consultation today.  Stephen has over three decades of experience handling employment law cases and whistleblower claims.  He will sit down with you, along with one of his senior associates to discuss the facts of your case and outline a course of action.

If you are contemplating making a whistleblower claim, DO NOT take any steps until you have consulted an employment law attorney with whistleblower experience.  Mis-gathered information, or allowing your employer to find out about the investigation too early can result in a denial of acceptance of your claims by the government agencies responsible for prosecuting them!

Contact us first.  We look forward to defending your rights.