Dementia drug manufacturer to ordered to pay huge settlement

Abbott Laboratories to pay $1.5 billion over misbranding drug

From Terry Frieden, CNN Justice Producer

Washington (CNN) — Abbott Laboratories has pleaded guilty and agreed to pay $1.5 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of the prescription drug Depakote, the U.S. Justice Department said Monday.

The total — the second-largest payment ever by a drug company — includes a criminal fine of $700 million and civil settlements with the states and federal government totaling $800 million.

Abbott pleaded guilty to misbranding Depakote by promoting the drug to control agitation and aggression in patients with elderly dementia and to treat schizophrenia when neither use was approved by the Food and Drug Administration, the Justice Department said.

Abbott will be subject to court-supervised probation and reporting obligations for Abbott’s CEO and board of directors.

Under the law, a drug maker’s promotional activities must be limited to uses approved by the FDA. Promotion by the manufacturer for “off-label” uses renders a product misbranded.

In this case, Abbott pleaded guilty to misbranding Depakote by promoting the drug for off-label uses.

The company admitted that, from 1998 through 2006, it “maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use,” the Justice Department said in a news release.

“In addition, from 2001 through 2006, the company marketed Depakote in combination with atypical antipsychotic drugs to treat schizophrenia, even after its clinical trials failed to demonstrate that adding Depakote was any more effective than an atypical antipsychotic alone for that use.”

The FDA approved Depakote only for epileptic seizures, bipolar mania and the prevention of migraines.

In 1999, Abbott discontinued a trial of Depakote in the treatment of dementia due to adverse events that included drowsiness, dehydration and anorexia.

Abbott trained its sales force to promote the drug to health care providers and employees of nursing homes as better than antipsychotic drugs for controlling agitation and aggression in elderly dementia patients, the release said.

Abbott sales representatives touted the fact that Depakote was not subject to certain provisions of the Omnibus Budget Reconciliation Act of 1987 and its regulations intended to prevent medications from being used unnecessarily in nursing homes, it added.

“Exploiting the fact that certain OBRA provisions did not yet apply to Depakote, Abbott sales representatives stated that by using Depakote, nursing homes could avoid the administrative burdens and costs of complying with OBRA,” the news release said.

The company wound up giving millions of dollars in rebates to pharmacists at long-term-care facilities that were based on increases in the use of the drug in nursing homes they serviced, the news release said.

“In addition to using its sales force to promote the drug to health care providers and employees of nursing homes, Abbott created programs and materials to train the pharmacy providers’ consultant pharmacists about the off-label use of Depakote to encourage them to recommend the drug for this unapproved use,” it added.

“Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies,” said Acting Associate Attorney General Tony West. “As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price.”

The company also admitted that, from 2001 through 2006, it marketed the drug to treat schizophrenia. Though the company paid for two studies of the use of Depakote to treat schizophrenia, neither met the goals established for the study, it said.

“When the second study failed to show a statistically significant treatment difference between antipsychotic drugs used in combination with Depakote and antipsychotic drugs alone, Abbott waited nearly two years to notify its own sales force about the study results and another two years to publish those results,” it said. During that time, the company continued to promote the drug for the treatment of schizophrenia.

Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote. Under the plea agreement, it will pay a criminal fine of $500 million, forfeit assets of $198.5 million, and submit to a term of probation for five years.

Under the civil settlement, Abbott agreed to pay $800 million to the federal government and to states that participate in the agreement to resolve claims that its practices caused false claims to be submitted to government health care programs.

The settlement covers allegations that Abbott paid health care professionals and long-term-care pharmacy providers to induce them to prescribe the drug.

The civil settlement resolves four lawsuits pending in federal court in the Western District of Virginia under the whistle-blower provisions of the False Claims Act. As part of the resolution, the whistle-blowers will receive $84 million from the federal share of the settlement amount.

In a statement posted on its website, Abbott said it had cooperated fully with the government during its investigation.

The company plans to separate into two publicly traded companies by the end of the year.

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