The Joplin Globe, Joplin, MO

Business

May 7, 2012

Abbott Laboratories to pay $1.6 billion to settle Depakote claims

CHICAGO — Abbott Laboratories will pay $1.6 billion to settle federal and state claims that it improperly marketed the neurologic medication Depakote for off-label uses, the company said Monday.

Abbott will pay $800 million to resolve civil allegations split among federal and state governments, $700 million in criminal penalties and $100 million to states to resolve consumer protection matters, the North Chicago-based company said.

Abbott said in previous filings with the Securities and Exchange Commission that it had earmarked $1.5 billion for a potential settlement.

Under terms of the settlement, Abbott has agreed to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act for misbranding. The company also will be restricted from marketing the drug for off-label uses.

Abbott, which plans to spin off its legacy drug business into a separate, publicly traded firm called AbbVie later this year, said certain compliance measures and certification requirements will transfer to the new company.

Depakote, an anti-seizure and mood-stabilizing drug, is approved by the Food and Drug Administration to treat epilepsy, bipolar disorder and migraine prevention. Lawsuits filed by four groups of whistle-blowers alleged Abbott marketed the drug for off-label uses, including for treatment of schizophrenia, agitated dementia and autism. The Department of Justice intervened in those suits to determine whether the company’s marketing of the drug violated civil and criminal laws, including fraudulently charging Medicare and Medicaid.

Those lawsuits alleged that Abbott encouraged and trained its salespeople to market Depakote off-label to nursing-home directors, geriatric doctors and other long-term care providers. The company also gave doctors illegal kickbacks to talk about off-label uses of the drug to boost sales, according to the whistle-blower suits, which were filed in federal courts in Illinois, Virginia and the District of Columbia.

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

The FDA approved Depakote in 1983 to treat certain seizures in adults and children over age 10. Since then, the drug has been approved to treatment of other types of seizures, manic episodes of bipolar disorder and the prevention of migraine headaches.

The FDA, which has ramped up its investigation of off-label drug marketing, has induced several large settlements from other drugmakers in recent 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.

 

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