Abbott Finally Escapes Consent Decree

Abbott Finally Escapes Consent Decree

May 14th, 2012 // 1:11 pm @


After more than a dozen years, Abbott Laboratories is no longer operating under a consent decree. The settlement was made in 1999 after a remarkable six-year run of manufacturing deficiencies and subsequent failures to fix various problems in its diagnostics division. The decree was terminated last month, according to an Abbott spokeswoman.

The move came after the drug and device maker was able to demonstrate an ability to remain in compliance with good manufacturing practices. “Many consent decrees that FDA enters with firms allow the firms, under defined circumstances, to seek court termination of the decrees following extended periods of compliance. That is the case with this one,” an FDA spokeswoman wrote us in an e-mail (here is an FDA statement at the time the decree was announced).

The termination comes at a propitious moment for Abbott ceo Miles White. The drug and device maker, you may recall, plans to split into two publicly traded companies. One will focus on devices, diagnostics, nutritionals and, outside the US, branded generics. The other will be a so-called research-based pharma that will feature a portfolio of existing meds, such as Humira and Synthroid, along with a pipeline of some 20 compounds in Phase II or Phase III development (see this).

And so, on the eve of the split, White can boast that he is a quality-driven manager and tout that Abbott, which he will continue to run, has freed itself from a burdensome and costly pact. In addition to paying a $100 million fine at the time the decree was signed in 1999, Abbott also had to avoid additional penalties for products that remained out of compliance. And there was the additional expense of maintaining a crew of consultants to ensure terms were met (here is the decree).

Meanwhile, the legacy pharma business – which will be renamed Abbvie, a nomenclature that has drawn derision in some quarters (see here) – is saddled with a freshly minted Corporate Integrity Agreement that was inked this month to resolve various probes into the marketing of its Depakote seizure med. This also involved paying a $1.6 billion fine, the second-largest such penalty to be paid by a drugmaker (you can read more here).

However, the corporate integrity agreement is the not the first to be signed since White became ceo in 1999. In 2001, TAP Pharmaceutical, a joint venture between Abbott and Takeda Pharmaceutical, paid $875 million for illegally manipulating Medicare and Medicaid in connection with promoting its Lupron prostate cancer drug. And in 2003, Abbott paid more than $600 million to resolve charges its nutritional business bilked the same government programs.

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