On May 7, 2012, the Justice Department announced that Abbott Laboratories Inc. ("Abbott") has agreed to pay $1.5 billion to resolve criminal and civil investigations into the company's promotion of the prescription drug Depakote for uses not approved as safe and effective by the Food and Drug Administration ("FDA"). The resolution, which is the second-largest settlement ever for a drug company, includes a criminal fine and forfeiture totaling $700 million and civil payments with the federal government and states totaling $800 million. Whistleblowers will receive $84 million from the federal share of the settlement amount. With this settlement, the Justice Department has recovered over $10.2 billion in False Claims Act cases and has secured $3.9 billion in criminal fines, forfeitures, disgorgements and restitution relating to violations of the Food, Drug and Cosmetic Act ("FDCA") since January 2009.

Abbott Admits to Promoting Depakote for Off-Label Uses

The FDA approved Depakote as safe and effective for the treatment of epileptic seizures and bipolar mania and the prevention of migraines. Under the FDCA, Abbott could promote Depakote only for those approved uses, not for any "off-label" uses. In the plea agreement, Abbott admitted promoting Depakote to control aggression and agitation in dementia patients and to treat schizophrenia.

Although a clinical trial showed that Depakote was contraindicated for treating elderly dementia patients, Abbott admitted promoting off-label use of Depakote to control behavioral disturbances in these patients by:

  • Maintaining a specialized sales force to market the drug in nursing homes;
  • Instructing sales representatives to advise nursing homes that using Depakote could help them avoid the costs of complying with federal laws designed to prevent the use of unnecessary medications in nursing homes;
  • Contracting with long-term care pharmacy providers to pay rebates triggered by increases in the use of Depakote in nursing homes; and
  • Creating programs and materials to train the pharmacies about the off-label use of Depakote.

In the Justice Department's announcement, Acting Associate Attorney General Tony West stated, "[n]ot only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies."

Abbott Entered Into a Global Resolution to Resolve Pending Investigations

Abbott entered into a global settlement with criminal, civil and administrative components to resolve the pending investigations:

  • Criminal Plea: Abbott pleaded guilty to a misdemeanor for misbranding Depakote in violation of the FDCA. Under the plea agreement, Abbott will pay a criminal fine of $500 million, forfeit assets of $198.5 million and submit to a term of probation with specified conditions for five years. In addition, Abbott will pay $1.5 million to the Virginia Medicaid Unit.
  • Civil Settlement: Abbott agreed to pay $800 million ($560,851,357 to the federal government and $239,148,643 to the states that participated in the settlement) to resolve allegations that its unlawful marketing and illegal remuneration practices caused the submission of false claims to government health care programs. This settlement also resolved four lawsuits pending in the Western District of Virginia under the qui tam provisions of the False Claims Act. The whistleblowers get $84 million from the federal share of the settlement.
  • Administrative: Abbott entered into a five-year Corporate Integrity Agreement ("CIA") with the Department of Health and Human Services, Office of the Inspector General. The 88-page CIA includes the requirements, among others, that Abbott's board of directors review the effectiveness of its compliance program and that Abbott's top executives certify to compliance. Abbott also is subject to exclusion from federal health care programs if it fails to comply with these measures.

Abbott Entered Into a Five-Year Settlement to Resolve Consumer Protection Case

Also on May 7, Virginia's attorney general announced that Abbott settled a companion consumer protection case involving 45 states and the District of Columbia for $100 million. This payment, which is the largest ever obtained in this type of litigation, will be divided among the participating states. As part of the settlement, Abbott also agreed to abide by certain conditions for five years, including:

  • Limiting the creation and use of responses to physician requests for information about off-label uses of Depakote;
  • Restricting the dissemination of reprints of clinical studies involving off-label uses of Depakote;
  • Disclosing on its website Continuing Medical Education ("CME") grants relating to Depakote in amounts greater than $200;
  • Precluding the use of CME grants to promote Depakote; and
  • Registering clinical trials and posting a summary of the results on a publicly accessible National Institutes of Health website.

Government's Focus on Off-Label Promotion of Prescription Drugs

The Abbott case underscores the government's continuing interest in holding companies accountable for off-label marketing of prescription drugs and the need for continued pharmaceutical company diligence in maintaining a rigorous compliance effort on off-label marketing. Companies would be well advised to examine the terms and conditions of the Abbott CIA, as well as other such agreements, and the fairly extraordinary conditions imposed on Abbott through the consumer protection settlement agreement.

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