Abbott Laboratories to pay $1.6 billion over illegal marketing of Depakote

May 7, 2012

Global pharmaceutical giant Abbott Laboratories has agreed to pay federal and state governments $1.6 billion in criminal and civil fines for illegally promoting unapproved uses of its drug Depakote, including to sedate elderly patients in nursing homes, officials announced Monday.

The settlement, which includes an agreement to plead guilty to a criminal misdemeanor, is the second-largest in a string of multimillion-dollar payouts in recent years resulting from stepped-up enforcement by the Justice Department and state investigators against drugmakers that “misbrand” their products.

While doctors can — and frequently do — prescribe drugs for purposes beyond those approved as “safe and effective” by the Food and Drug Administration, it is illegal for manufacturers to actively market their products for such off-label use.

“Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and down-played the risks apparent from its own clinical studies,” Tony West, acting associate attorney general, said in a statement.

In 2009, Pfizer paid the largest settlement to date in such a case — $2.3 billion in connection with its marketing of drugs that included the painkiller Bextra. Last year, British drugmaker GlaxoSmithKline announced that it expects to reach a bigger settlement this year related to its development and promotion of the diabetes drug Avandia, among others.

Abbott’s settlement marks the culmination of a four-year investigation into an array of strategies the Illinois-based multinational employed to vastly expand the market for its neurologic drug Depakote, which the FDA has approved to treat three conditions: epileptic seizures, migraines, and the manic episodes experienced by people with bipolar disorder.

As part of the settlement, Abbott admitted that beginning in 1998 it trained a special sales force to promote Depakote to nursing-home employees as a way to control the agitation and aggression that can occur in elderly patients suffering from dementia.

In 1999, Abbott was forced to discontinue a clinical trial testing Depakote’s effectiveness against dementia when it became evident that the drug increased the incidence of drowsiness, dehydration and anorexia in elderly study participants. Yet the sales team continued to push the drug to nursing homes through 2006.

In its marketing, Abbott highlighted the fact that Depakote was not covered by a 1987 law designed to prevent the use of unnecessary medications by nursing homes. So if nursing homes used it in place of other options, they could avoid the administrative costs and burdens of complying with that law.

The attorney for Meredith McCoyd, one of four former Abbott sales representatives whose whistleblower lawsuits prompted the investigation, said the company offered nursing homes a second rationale.

“Abbott directed its sales force to get Depakote widely used in nursing homes, principally to neutralize older patients as a substitute for proper staffing,” attorney Reuben Guttman said in a statement. “Abbott essentially preyed on . . . the most helpless patient populations.”

The Medicaid Fraud Control Unit of the Virginia attorney general’s office teamed with the U.S. Attorney’s office of Virginia’s Western District to investigate the case. Officials said the four whistleblowers — none of whom lived in Virginia — went there with the case because of the unit’s track record of successful investigations.

“I’m committed to ensuring that money intended for medical services for the poor isn’t stolen from them through fraud,” Virginia Attorney General Ken Cuccinelli II (R) said in a statement Monday.

Abbott also enlisted the help of pharmacies that serve long-term-care facilities, offering rebates based on how much they increased the use of Depakote in the nursing homes they served, according to the settlement.

By its own admission, the company was just as aggressive in marketing the drug for treatment of schizophrenia between 2001 and 2006.

Two studies funded by Abbott failed to prove the drug’s effectiveness as a booster for antipsychotic drugs. Yet the company waited two years after the conclusion of the second study to notify its sales force of the results and another two years to publish the findings.

In a statement, Laura J. Schumacher, Abbott executive vice president and general counsel, said she was “confident we have the programs in place to satisfy the requirements of this settlement. 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.”

If Abbott breaches the terms of its compliance programs, it could face financial penalties under the terms of a five-year probationary “Corporate Integrity Agreement” with the inspector general of the Department of Health and Human Services that it agreed to as part of the settlement.

The total payout includes a criminal fine of $500 million and forfeiture of $200 million in assets. An additional $800 million will go to the federal government, the District of Columbia and nearly every state to resolve broader civil complaints that Abbott caused false claims to be submitted to government health insurance programs such as Medicare and Medicaid.

The civil complaints also alleged that the company unlawfully promoted Depakote to treat additional conditions including post-traumatic stress disorder, autism, depression, anxiety, and psychiatric conditions in children and adolescents.

The whistleblowers will split $84 million of the federal share under a provision of the False Claims Act, which empowers private citizens to bring civil actions on behalf of the United States and share in any recovery.

States will receive an additional $100 million under a separate agreement negotiated by states attorneys general.

Staff writer Sari Horwitz and staff researcher Lucy Shackelford contributed to this report.

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