US pharmaceutical company Celgene has agreed to pay $280 million to settle a whistleblower lawsuit accusing it of fraud for promoting a thalidomide-based drug pair re-purposed to treat cancer, even though this indication had not been approved by the US Food and Drug Administration (FDA).

The company will pay $259.3 million to the US Treasury and $20.7 million to 28 states and the District of Columbia (Washington, DC).

In a statement, Celgene said it had settled to avoid uncertainty, distraction and expensive litigation, while denying any wrongdoing.

Acceptance of the fine ended a lawsuit brought in a Los Angeles, California, federal court by a former Celgene sales representative, Beverly Brown, under the False Claims Act. This act allows private citizens to bring suit on behalf of the United States and share in any recovery.

The US government may intervene in the lawsuit. In this case, it chose not to; however, the US Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG monitored the case.

According to Brown, she was trained by the Summit, New Jersey-based company to promote a drug branded as Thalomid and a similar drug branded as Revlimid for unapproved cancer treatments.

The sales representative, who can expect to receive at least 25% of the settlement according to her lawyer, claimed further that that Celgene submitted false claims to Medicare, the US healthcare program for the elderly, and healthcare programs in 28 states and Washington DC.

Celgene’s Thalomid contains the same active ingredient as thalidomide, a Germany-produced drug, which – prescribed to pregnant women to treat morning sickness in the 1950s and 1960s – caused severe birth defects. Thalidomide was approved by the FDA in 1998 to treat a rare skin disease related to leprosy, with restrictions stipulating that it should not be taken by pregnant women.

At the time, the medical community is said to have believed thalidomide’s use could potentially be expanded to treat a broader range of conditions, from cancer to autoimmune diseases and AIDS. However, it was not until later that it was approved to treat rare cancers, such as multiple myeloma.

In her lawsuit, Brown also claimed that Celgene’s aggressive promotion of the two drugs included false and misleading statements and that the company paid kickbacks to doctors to prescribe the drugs. A judge dismissed these allegations in 2017, but allowed the lawsuit to proceed.