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On Monday it was announced that Cephalon has agreed to pay some $425 million to the U.S. Justice Department resolve Medicaid claims alleging that they promoted the powerful painkillers Actiq and Fentora for off-label use. Off-label use pertains to when doctors prescribe medications for uses they are not approved by the FDA to treat. Physicians are allowed prescribe medications as they see fit, however; it is not permissible for a pharmaceutical company to market a drug for off-label use.

Allegations of off-label marketing have been suggested in the case of both Fentora and Actiq. Allegedly Fentora and Actiq were marketed as acceptable drugs to treat back pain and migraines. Fentora was linked to three deaths over the summer regarding off-label use of the drug. Fentora is designed to treat break-through pain in cancer patients that have not had pain resolved by their round-the-clock opioid regimens.

Cephalon has agreed to a single misdemeanor violation but maintains its innocence on charges of off-label marketing. Cephalon has increased reserves for the settlement but could be in store for tough times ahead. The company reported a loss of over $300 million in the third quarter alone, in obvious contrast to an almost $100 million profit in the same quarter a year ago.

For more information on this subject, please refer to the section on Drug, Medical Devices, and Implants.

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