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Abbott Settles Marketing Lawsuit

Original source:

New York Times
May 7, 2012

WASHINGTON — The pharmaceutical company Abbott Laboratories said on Monday that it had reached an agreement with the federal and nearly all state governments to pay $1.6 billion in connection with its illegal marketing of the anti-seizure drug Depakote.

The settlement comes as the Justice Department and the states have increased scrutiny of the sales and marketing practices of pharmaceutical companies, particularly in cases in which they market drugs for uses that are not approved by the Food and Drug Administration. Last year, GlaxoSmithKline, the British drug company, agreed to pay $3 billion to settle civil and criminal investigations into its sales practices for several drugs, including the diabetes drug Avandia. In 2009, Pfizer paid $2.3 billion to settle similar charges. Several other pharmaceutical companies have also reached multimillion-dollar settlements over their practices.

Abbott illegally marketed the drug for schizophrenia and agitated dementia, even though it was approved only for treatment of seizure disorders, or mania associated with bipolar disorder and migraines, according to a media release from the Justice Department.

Doctors may prescribe drugs for any purpose, but pharmaceutical companies are prohibited from promoting drugs for conditions that are not approved by the agency.

According to the Justice Department, Abbott admitted to setting up a “specialized sales force” that marketed Depakote in nursing homes to control agitation and aggression in aging patients with dementia, even though there was no evidence that it was safe and effective for such use.

The company trained its sales representatives to promote Depakote to nursing homes as a way to sedate patients without running afoul of a federal law intended to prevent overuse of certain medications.

“Abbott sales representatives stated that by using Depakote, nursing homes could avoid the administrative burdens and costs of complying with” the law, according to the Justice Department news release.

From 2001 to 2006, Abbott marketed the drug for use along with antipsychotic drugs to treat schizophrenia, even though the company’s clinical trials showed that taking Depakote was not more effective than using the antipsychotic drugs.

The company said in a news release that it had been under investigation for four years in connection with sales that dated back to 1998.

As part of the agreement, Abbott said that it would pay $800 million to resolve civil cases brought by federal and state authorities, $700 million in criminal penalties and $100 million to states in connection with consumer protection matters.

The company will also plead guilty to one misdemeanor charge of misbranding for violating the Food, Drug and Cosmetic Act. The agreements include several conditions the company must meet to show it is properly marketing the drug.

“We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement,” Laura J. Schumacher, the general counsel for Abbott, said. “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.”

Abbott’s actions were particularly egregious because they aimed at older patients with dementia, “people who didn’t have the ability to engage in informed consent,” said Reuben Guttman, the lawyer who represented Meredith McCoyd, a former Abbott sales representative who was the lead whistle-blower in the case. The four whistle-blowers are to share $84 million in federal rewards and $22 million for state-level claims, Mr. Guttman said.

He called on the federal government to bring drug companies to task in a more meaningful way than simply fining them hundreds of millions of dollars — penalties that often amount to only a small percentage of their profits.

“To me, what happened here was a train wreck, and when you have train wrecks in this country, you investigate,” Mr. Guttman said.

Shares of Abbott rose 10 cents to close at $62.51 on Monday. Abbott set aside $1.5 billion in the third quarter last year to cover the costs of the anticipated settlement.