Abbott Laboratories has pleaded guilty and agreed to pay $1.5 billion to resolve criminal and civil charges for fraudulently promoting its anti-seizure drug Depakote for a number of unapproved, off-label purposes. The near-record payout, the second largest by a drug company according to the U.S. Justice Department, also resolves four whistleblower lawsuits brought against Abbott Laboratories under the False Claims Act, which allows private citizens to sue on behalf of the United States and share a percentage of funds recovered.
Deputy U.S. Attorney General James M. Cole said Monday’s settlement “shows further evidence of our deep commitment to public health and our determination to hold accountable those who commit fraud. We are resolute in stopping this type of activity and today’s settlement sends a strong message to other companies.”
Whether Abbott and other big pharmaceutical manufacturers get that message remains to be seen.
According to the Justice Department, Abbott illegally and aggressively pushed Depakote for unapproved uses over several years starting in 1998 when it established and trained a specialized sales force to market the drug in nursing homes for the treatment of agitation and aggression in elderly dementia patients. This practice continued for several years, even after Abbott was forced to discontinue a clinical trial of Depakote for dementia patients in 1999 when several patients began experiencing a number of adverse reactions.
Additionally, from 2001 through 2006, Abbott marketed Depakote as an effective treatment for schizophrenia, even after its own studies found that Depakote wasn’t effective in treating the condition. In fact, after Depakote failed the schizophrenia trials, Abbott waited two years to inform its sales force of those results and another two years to publish them. Meanwhile, the company continued to promote the drug as an effective schizophrenia treatment.
U.S. Attorney Timothy Heaphy of the Western District of Virginia told reporters that Abbott earned about $13 billion from Depakote sales during the period investigated, but he said it was difficult to determine how much of those profits came from selling the drug for illegal purposes.
The U.S. Food and Drug Administration approved Depakote only for use in treating epileptic seizures, bipolar mania, and migraine prevention. Illegally promoting the drug for unapproved purposes – a practice not uncommon among giant drugmakers – renders the product misbranded. Criminal and civil penalties typically amount to just a small percentage of the profits drug companies make from these illegal and often dangerous practices.
“Crimes involving the misbranding of drugs for financial gain will not be tolerated,” said Richard Weber, Chief of Criminal Investigation for the IRS. “The special agents of IRS Criminal Investigation will use all their investigative tools, including the use of asset forfeiture statutes, to combat financial crimes and hold corporations accountable for their actions.” The IRS was just one of several federal and state agencies to investigate Abbott’s criminal activities.
Under the plea agreement, Abbott will pay a criminal fine of $500 million, forfeit assets of $198.5 million, and submit to a term of probation for five years. In addition, Abbott will pay $1.5 million to the Virginia Medicaid Fraud Control Unit.
Under the civil settlement, Abbott will pay $561 million to the federal government and $239 million to 45 states and the District of Columbia for defrauding taxpayer-funded federal and state health care programs, including Medicare, Medicaid, TRICARE, the Federal Employees Health Benefit Program, the Department of veteran’s Affairs and federal Workers’ Compensation programs.
The four whistleblowers who brought charges against Abbott for its fraudulent Depakote promotions will share $84 million of the federal settlement amount.
The Justice Department has recovered more than $7.4 billion since January 2009 in cases involving fraud against federal health care programs. With the settlement announced Monday, the Justice Department’s total recovery of taxpayer money under the False Claims Act since January 2009 will exceed $10.2 billion.
For more information about whistleblower laws, visit Beasley Allen online.