Abbott Shells Out $1.6 Billion to Settle Depakote Issue

Abbott Shells Out $1.6 Billion to Settle Depakote Issue

May 8th, 2012 // 1:17 pm @


In the second-largest such settlement by a drugmaker, Abbott Laboratories has agreed to pay $1.6 billion to resolve various probes into the marketing of its Depakote seizure med. The drug and device maker also pleaded guilty to one misdemeanor violation for misbranding, and entered into a five-year Corporate Integrity Agreement, which will be transferred to the forthcoming Abbvie unit that will be spun off and house its pharma business.

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The deal, which concludes a four-year investigation into sales practices that began in 1998, calls for $800 million to resolve civil charges that will be split by federal government and 49 states; $700 million for the criminal penalty and $100 million to the states to resolve consumer protection claims. Last fall, Abbott had previously disclosed a $1.5 billion charge to cover the cost of a potential settlement in an earnings (back story). As part of the plea, Abbott will pay a criminal fine of $500 million, forfeit assets of $198.5 million and faces five years of probation.

The misbranding charge stems from promoting the drug to control agitation and aggression in elderly dementia patients and to treat schizophrenia when neither of these uses was FDA approved. Abbott admitted that from 1998 through 2006, a specialized sales force was trained to market Depakote in nursing homes to control agitation and aggression, and from 2001 through 2006, also marketed the pill in combination with atypical antipsychotics to treat schizophrenia, even after a clinical trial failed to demonstrate the cocktail was more effective than an atypical antipsychotic alone.

The civil settlement addresses broader allegations by the feds that from 1998 through 2008, Abbott unlawfully promoted Depakote for unapproved uses, including behavioral disturbances in dementia patients, psychiatric conditions in children and adolescents, schizophrenia, depression, anxiety, conduct disorders, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal, attention deficit disorder and autism.

Abbott trained reps to promote Depakote because the pill was not subject to certain provisions of the Omnibus Budget Reconciliation Act of 1987 (OBRA) and regulations designed to prevent the use of unnecessary meds in nursing homes, the feds note. Exploiting the fact that certain OBRA provisions did not yet apply to Depakote, Abbott reps maintained that nursing homes could avoid administrative burdens and costs of complying with OBRA by using the drug.

The civil deal also covers allegations that Abbott offered and paid kickbacks to health care professionals and long-term care pharmacy providers to induce them to promote and/or prescribe Depakote, and to improperly and unduly influence the content of company-sponsored Continuing Medical Education programs, according to the US Department of Justice (here is the statement).

Last year, the US Department of Justice intervened – or joined – a whistleblower lawsuit that was filed in late 2008 by former Abbott sales reps, who accused the drugmaker of concocting an illegal scheme to promote Depakote. Among the charges were allegations Abbott paid kickbacks to docs to boost prescriptions and, subsequently, defrauding Medicare and Medicaid (here is the lead lawsuit and here is yet another lawsuit). The whistleblowers will receive $84 million.

“We are thrilled with the results and hope that what was achieved here will have a positive impact on patient health in the days,” Meredith McCoyd, one of the whistleblowers and a former Abbott sales manager, tells us in a message sent by her attorney.

“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 says 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.”

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