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ABINGDON, Va. - Abbott
Laboratories Inc. on May 7 pleaded guilty to one misdemeanor criminal charge
and agreed to pay $1.5 billion in criminal fines, civil penalties and
forfeiture for off-label marketing its anti-epilepsy drug Depakote despite
knowing that it was not effective for those purposes (United States of
America v. Abbott Laboratories, No. 1:12-cr-26, United States of
America, ex rel. Meredith McCoyd v. Abbott Laboratories, et al., No.
1:07-cv-81, United States of America ex rel. Susan Mulcahy, et al., No.
1:08-cv-54, United States of America, ex rel. Tamara Dietzler v. Abbott
Laboratories, No. 1:09-cv-51, United States of America ex rel. Thomas J.
Spetter, Jr., No. 1:10-cv-6, W.D. Va.).
information available. Document
#28-120518-005F. Criminal plea agreement available. Document #28-120518-006P. Civil
settlement agreement available. Document
#28-120518-007P. Criminal forfeiture available. Document #28-120518-008R. Corporate
integrity agreement available. Document
Abbott pleaded guilty in the
U.S. District Court for the Western District of Virginia to a misdemeanor
charge of misbranding Depakote, Depakote ER and Depakote Sprinkle in violation
of the Food, Drug and Cosmetic Act (FDCA). Under a plea agreement, Abbott
will pay a criminal fine of $500 million, forfeit assets of $198.5 million, pay
$1.5 million to the Virginia Medicaid Fraud Control Unit and serve five years'
No restitution was ordered.
The plea agreement also
requires Abbott to report any probable violations of the FDCA to the federal
probation office, to have Abbott's CEO certify compliance with the reporting
requirements and for the Abbott board of directors to annually report on the
effectiveness of its compliance programs.
Also during the five-year
probation, Abbott will not compensate sales representatives for off-label
sales, will ensure that continuing medical education grant decisions are not
controlled by sales and marketing employees, will require that letters to
health care providers contain accurate and unbiased medical information and
will have policies ensuring that approved clinical trial results are published
in a consistent and transparent manner.
The guilty plea was entered
during a proceeding before Judge Samuel G. Wilson, who must issue a final
In addition to the guilty plea,
Abbott entered into a civil settlement to resolve claims under the False Claims
Act and the Anti-Kickback Statute that its off-label promotion and kickbacks to
health care and pharmacy providers caused false claims to be submitted to
federal and state health care programs such as Medicare and Medicaid.
Abbott agreed to pay $800 million plus interest to the federal government.
In the false claims/kickback
settlement, $560.8 million will go to the federal government and $239.1 million
to states participating in the settlement.
Meredith McCoyd, a qui tam
relator who filed the first of four whistle-blower lawsuits against Abbott,
will receive $84 million from the federal share as statutory payment for
bringing a whistle-blower lawsuit. According to the settlement agreement,
the other relators - Susan Mulcahy, Doreen Merriam, Sondra Knowles, Tamara
Dietzler and Thomas J. Spetter Jr. - will determine allocation of the $84
million in separate agreements among themselves.
In the criminal case, the United States
alleged that Abbott promoted Depakote for off-label use in controlling
agitation and aggression in elderly dementia patients and to treat
schizophrenia. The drug is approved only to treat epileptic seizures,
bipolar mania and migraines.
In an agreed statement of
facts, the government says Abbott admits that from 1998 to 2006, it maintained
a specialized sales force to market Depakote in nursing homes for the control
of agitation and aggression in elderly dementia patients. In addition,
the government says that from 2001 to 2006, Abbott marketed Depakote in
combination with atypical antipsychotic drugs to treat schizophrenia even
though clinical trials failed to demonstrate that adding Depakote to a regimen
was any more effective that atypical antipsychotics alone.
The government says that in
1999, Abbott discontinued a clinical trial of using Depakote to treat dementia
after an increase in adverse events including somnolence, dehydration and
Dodge Drug Restrictions
The government says Abbott's
sales representatives promoted Depakote in nursing homes because the drug was
not subject to certain provision of the Omnibus Budget Reconciliation Act
(OBRA) of 1987 and laws implementing regulations designed to prevent the use of
unnecessary medications in nursing homes. The government said Abbott's
sales representatives exploited OBRA loopholes, telling nursing home they could
avoid administrative burdens and costs of complying with OBRA by using
The government says that to
effectuate off-label sales, Abbott paid millions of dollars in rebates to
pharmacies that supplied long-term care facilities and that rebates were
intended to increase the use of Depakote. In addition, the government
says Abbott created programs and materials to train consultant pharmacists
about off-label use of Depakote.
From 2001 to 2006, the
government says, Abbott marketed Depakote to treat schizophrenia despite the
failure of two studies to support that use. Although the studies failed,
Abbott waited nearly two years to tell its sales representatives about the
results and waited another two years to publish the results, the government
In the civil settlement, the
federal government and states alleged that from 1998 to 2008, Abbott promoted
Depakote for off-label uses including behavioral disturbances in dementia
patients, psychiatric conditions in children and adolescents, schizophrenia,
depression, anxiety, conduct disorders, obsessive-compulsive disorder,
post-traumatic stress disorder, alcohol and drug withdrawal, attention deficit
disorder and autism.
The government says that
Abbott's false and misleading statements about the safety, efficacy, dosing and
cost-effectiveness of Depakote to control behavioral disturbances in dementia
patients was intended to help nursing homes avoid compliance with OBRA's
restrictions on antipsychotic drugs.
The civil settlement also
covers allegations that Abbott offered and paid kickbacks to health care
professionals and long-term care pharmacy providers to get them to prescribe or
buy Depakote and to influence the content of continuing medical education
The civil claims were made in
four False Claims Act lawsuits filed in the Western District of Virginia:
United States of American ex rel. Meredith McCoyd v. Abbott Laboratories
(No. 1:07-81), United States of America ex rel. Susan Mulcahy, et al. v.
Abbott Laboratories (No. 1:08-54), United States of America ex rel.
Tamara Dietzler v. Abbott Laboratories (No. 1:09-51) and United States
of America ex rel. Thomas J. Spetter, Jr. v. Abbott Laboratories (No.
Also as part of the civil
settlement, Abbott entered into a five-year corporate integrity agreement with
the Office of Inspector General of the U.S. Department of Health and Human
Services. The government says that if Abbott commits a material breach of
the integrity agreement, it is subject to exclusion from participating in
federal health care programs.
In November, Abbott reported
that it established a $1.5 billion litigation reserve related to ongoing
settlement discussions related to Depakote. The company previously
disclosed the investigation in regulatory filings.
In a May 7 statement, Abbott
noted that it "cooperated fully" with the investigation. The company said
that the compliance and certification measures called for in the settlements
will transfer to AbbVie, a research-based drug company Abbott will spin off by
the end of 2012.
Abbott said is it confident
it has programs in place to satisfy the settlement requirements. It said
it has "established robust compliance programs to ensure its marketing programs
meet the needs of health care providers and legal requirements."
2nd Largest Payment
The Justice Department says
the settlement is the second largest payment by a drug company. It said
that with the Abbott settlement, it has recovered more than $10.2 billion in
False Claims Act settlements since January 2009.
The government also says it
has collected $3.9 million in criminal fines, forfeiture, disgorgement and
restitution for violations of the FDCA.
The United States is
represented by U.S. Attorney Timothy J. Heaphy and Rick A. Mountcastle of the
U.S. Attorney's Office in Roanoke, Va.; Steven R. "Randy" Ramseyer of the U.S.
Attorney's Office in Abingdon; Carol Wallack, Lauren Bell, Jill Furman, Brian
McCabe and Edward C. Crooke of the U.S. Justice Department in Washington, D.C.;
Gregory E. Demske of the U.S. Department of Health and Human Services in
Washington; Paul J. Hutter of the U.S. Department of Defense in Washington;
Shirley R. Patterson of the U.S. Office of Personnel Management in Washington;
David Cope of the U.S. Office of Personnel Management in Washington and Cecily
A. Rayburn of the U.S. Department of Labor in Washington.
Abbott is represented by
Henry J. DePippo of Kirkland & Ellis in New York; James L. Brochin and
Theodore V. Wells Jr. of Paul, Rifkin, Wharton & Garrison in New York; Mark
R. Filip of Kirkland & Ellis in Chicago; and Abbott General Counsel Laura
J. Schumacher of Abbott Laboratories in Abbott Park, Ill.
McCoyd is represented by
Reuben A. Guttman of Grant & Eisenhofer in Wilmington, Del.
Mulcahy, Merriam and Knowles are represented by James A. Backstrom of James A.
Backstrom Counselor At Law in Philadelphia.
Dietzler is represented by
Susan M. Coler of Halunen & Associates in Minneapolis
and Steven M. Sprenger of Sprenger & Lang in Washington. Spetter is represented by
W. Scott Simmer of Blank Rome in Washington.
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