Abbott Pleads Guilty To Misbranding; Will Pay $1.6 Billion

Abbott Laboratories became the latest drug company to swallow the bitter -- but evidently palatable -- pill of paying a huge fine for marketing a drug off label. All told, it will pay $1.6 billion in combined civil and criminal penalties and plead guilty to one criminal count of misdemeanor violation of the Food, Drug and Cosmetic Act for "misbranding" the drug Depakote.

Abbott admits that it trained and maintained a sales force to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients from 1998 through 2006, an off-label use. It also admits that it marketed Depakote in combination with atypical antipsychotic drugs to treat schizophrenia for six years beginning in 2001 even though clinical trials did not demonstrate that the addition of Depakote was any more effective than using just an atypical antipsychotic alone, according to the Justice Department.

Pharmaceutical companies are not allowed to actively promote off-label uses of their drugs, though doctors have the discretion to prescribe off-label, report Peter Loftus and Brent Kendall in the Wall Street Journal. Depakote has only been approved for the prevention of migraines, treating acute manic episodes in bipolar patients and halting seizures in adults and children.



"We are resolute in stopping this type of activity and today's settlement sends a strong message to other companies," says deputy attorney general James M. Cole in a statement. Adds acting associate attorney general Tony West: “Not only did Abbott engage in off-label promotion, it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies. As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price.”

The Chicago Tribune’s Peter Frost points out that the “settlement is “one of a string of recent enforcement actions pursued by the FDA, which has ramped up its investigation of off-label drug marketing, ensnaring several other large drug makers within the last several years.” 

Frost cites GlaxoSmithKline agreeing to pay $3 billion to settle civil and criminal charges for illegal marketing of its diabetes drug Avandia and others last November, as well as Pfizer paying $2.3 billion in 2009 for similar allegations about its painkiller Bextra. Eli Lilly settled for $1.4 billion the same year for Zyprexa, which is used to treat schizophrenia.

Reuben Guttman, the attorney representing the former Abbott sales representative who was the lead whistle-blower in the case, says 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,’ Michael S. Schmidt and Katie Thomas report in the New York Times

But Guttman says the government should “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,” write Schmidt and Thomas. “To me, what happened here was a train wreck,” Guttman says, “and when you have train wrecks in this country, you investigate.” 

Four whistle-blowers, including Guttman’s client Meredith McCoyd, will share $84 million in federal rewards and $22 million for state-level claims. Guttman is widely quoted in stories about the settlement and the Emory School of Law posted a 48-minute YouTube interview with him about the settlement yesterday. Among other things, he discusses the “pattern of practice” of misbranding that is “ongoing” in the industry.

The settlement is “the culmination of a four-year investigation into an array of strategies the Illinois-based multinational employed to vastly expand the market” for Depakote, reports N.C. Aizenman in the Washington Post. “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,” Aizenman reports.

The company had set aside funds to pay a settlement of about this size, Jef Feeley and Margaret Cronin Fisk report in Bloomberg.

“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, 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.”

1 comment about "Abbott Pleads Guilty To Misbranding; Will Pay $1.6 Billion".
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  1. Kevin K from Anonymous, May 8, 2012 at 1:17 p.m.

    These fines pale in comparison to the money these companies make by cheating. So are the fines really a deterrent?

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