Otsuka expects to shell out $120M to settle Avanir's Nuedexta marketing probe

Avanir has faced intense scrutiny over its marketing of neurological treatment Nuedexta, and now the company is nearing a deal with the Department of Justice to resolve the government's probe.

The company reached an "agreement in principle" to wrap up a federal investigation into its Nuedexta marketing, it disclosed on Thursday. The DOJ has been investigating Avanir since at least early 2016, according to posts on industry message board Cafepharma.

The company came under public pressure in October 2017, when CNN reported that it had marketed the drug primarily to nursing home residents, even though Neudexta hasn't been tested extensively in elderly people. Nuedexta is FDA-approved to treat pseudobulbar affect (PBA), a disorder that affects patients with neurological conditions such as multiple sclerosis. It is marked by periods of uncontrollable crying or laughing.

Avanir said it won’t provide details of the settlement until it’s finalized. But in annual financial results released on Wednesday, Avanir's parent company, Otsuka, said it estimates that wrapping up the Nuedexta investigation will cost approximately $120 million including fines, damages, disgorgement, restitution and more. Otsuka said it accrued part of that figure last year and plans to accrue the rest this year. 

Details of the investigation won't be clear until the Justice Department announces a settlement. But CNN's 2017 report outlined the company’s efforts to induce doctors to prescribe Nuedexta for nursing home residents. Over four years, Nuedexta sales jumped 400% to $300 million in 2016, the publication reported, and more than half of the pills Avanir had sold since 2012 went to long-term care facilities. The drug’s official label acknowledges a lack of extensive testing in elderly patients. 

CNN highlighted instances where doctors took payment from Avanir and in turn prescribed Nuedexta to nursing home residents. One doctor alone received half a million dollars in cash, travel and meals over three years. 

In response, Avanir said "PBA occurs in people who already have a neurological condition" such as ALS, MS, Alzheimer’s or other conditions.

"Because neurological disorders commonly occur in residents of long-term care facilities, treatment with Nuedexta can be appropriate for residents in these facilities who also have PBA," the company said, defending its promotional activities as in compliance with FDA policies and its own ethical guidelines. 

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