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Abbott to Pay $1.6B to Settle Depakote Claims

By | Depakote, Pharmaceutical litigation, Uncategorized

The following article was originally published on May 8, 2012 by Chicago Tribune.

Abbott Laboratories said Monday it will pay $1.6 billion to settle federal and state claims that it illegally marketed the anti-seizure medication Depakote for uses not approved by the Food and Drug Administration.

As part of the settlement agreement, North Chicago-based Abbott said it would pay $800 million to resolve civil cases brought by federal and state governments, $700 million in criminal penalties and $100 million to states to resolve consumer protection matters.

The company will to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act for misbranding. Abbott also agreed to a five-year probationary period in which it must report any probable violations of the law to the probation office, according to the U.S. Department of Justice.

Illinois Attorney General Lisa Madigan said the state will receive $20 million as part of the deal.

The settlement was expected by investors. Last year, Abbott earmarked $1.5 billion to cover projected costs of the settlement, and set aside another $100 million in April for the same purpose.

Shares of Abbott finished Monday up 10 cents, at $62.51.

Abbott, Chicagoland’s largest company as measured by market capitalization, plans to spin off its legacy drug business into a separate, publicly traded firm called AbbVie this year. It said in a release that certain compliance measures and certification requirements will transfer to the new company.

“We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement,” Abbott General Counsel Laura Schumacher said in a statement.

“The company takes its responsibility to patients and health care providers seriously and has established robust compliance programs to ensure its marketing programs meet the needs of health care providers and legal requirements,” Schumacher said.

Depakote, an anti-seizure and mood-stabilizing drug, was first approved by the FDA in 1983 to treat certain seizures in adults and children older than 10. Since then, the drug has been approved to treat other types of seizures, manic episodes of bipolar disorder and for the prevention of migraine headaches.

The Justice Department said in a release that the company illegally marketed Depakote for uses including for treatment of schizophrenia, agitated dementia and autism.

Though doctors can prescribe drugs “off-label,” as the practice is known, companies are prohibited from marketing them to treat conditions that are not approved by the FDA.

Abbott said it had been under investigation for four years in connection with the sale and promotion of Depakote stretching back to 1998.

The investigations led by the federal government and states’ attorneys general were based partly on whistle-blower lawsuits filed in federal courts in Illinois, Virginia and the District of Columbia that accused Abbott of illegally promoting Depakote. Those suits also alleged that the company gave doctors and pharmacists illegal kickbacks to talk about off-label uses of the drug to boost sales.

The first suit, filed in 2007 by former Abbott saleswoman Meredith McCoyd, accused the drug maker of encouraging her and other salespeople to promote the drug in nursing homes and public mental health centers, where most patients were covered by federal health care programs, including Medicaid.

The Justice Department intervened in those suits to determine whether the company’s marketing of the drug violated civil and criminal laws.

In a release, the Justice Department said Abbott admitted that from 1998 to 2006, it “maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use.”

From 2001 to 2006, it said, the company marketed the drug for use in combination with anti-psychotic drugs to treat schizophrenia, though its own clinical trials showed Depakote provided no benefit.

“Today’s settlement shows further evidence of our deep commitment to public health and our determination to hold accountable those who commit fraud,” said James M. Cole, Deputy Attorney General. “We are resolute in stopping this type of activity and today’s settlement sends a strong message to other companies.”

The Abbott settlement is one of a string of recent enforcement actions pursued by the FDA, which has ramped up its investigation of off-label drug marketing, ensnaring several other large drugmakers within the last several years.

In November, GlaxoSmithKline PLC said it would pay the U.S. government $3 billion to settle civil and criminal charges for illegal marketing of diabetes drug Avandia and others.

In 2009, Pfizer Inc. paid $2.3 billion for similar allegations about its painkiller Bextra, and Eli Lilly & Co. settled for $1.4 billion the same year for Zyprexa, used to treat schizophrenia.