Abbott pays big price to settle on Depakote

Abbott will pay $1.6 a billion settlement to the federal government, 49 states and the District of Columbia to resolve a four-year investigation related to its sales and marketing practices for Depakote (divalproex)

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Jeffrey Bouley

ABBOTT PARK, Ill.—Abbott took a big financial hitthis week as it reached a settlement with federal and 49 state authorities inthe United States, plus the District of Columbia, to resolve all outstandingissues regarding a previously disclosed investigation of past sales andmarketing practices relating to its neurologic medication Depakote—to the tuneof $1.6 billion, making it the second-biggest drug-marketing settlement in U.S.history.

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The current record-holder is the $2.3 billionsettlement Pfizer Inc. paid in 2009 to resolve U.S. investigations of impropermarketing of its Bextra painkiller and other drugs.

The saga for Abbott began some four years ago withan investigation into past sales activities that began in 1998 involving Depakote(divalproex). Abbott says that it "cooperated fully with the government duringits investigation."

The end result is that Abbott—which employsapproximately 91,000 people and markets its products in more than 130 countries—willpay $800 million to resolve civil allegations, to be split among federal andstate governments, $700 million for a criminal penalty and $100 million tostates to resolve consumer protection matters. According to Abbott, "Theseamounts were previously reserved in anticipation of [the] agreement."

Furthermore, as part of the resolution of thematter, Abbott has agreed to plead guilty to one misdemeanor violation of theFood, Drug and Cosmetic Act for misbranding. The company also agreed to certainother conditions of settlement, including the maintenance of specified compliancemeasures and annual certification regarding its state of compliance by its CEOand board of directors during a five-year probationary period.

Because the company had previously announced plansto separate into two publicly traded companies by year's end, the compliance measuresand certification requirements will transfer to the research-basedpharmaceutical company, AbbVie, upon separation because the obligations relateto the U.S. pharmaceutical business.

Abbott will also enter into a corporate integrityagreement (CIA) with the Office of Inspector General of the U.S. Department ofHealth and Human Services. The CIA will govern Abbott's compliance program fora period of five years and, according to the company, this "builds upon thecompany's existing comprehensive compliance program." The CIA will also transferto AbbVie upon separation.

"We are pleased to resolve this matter and areconfident we have the programs in place to satisfy the requirements of thissettlement," said Laura J. Schumacher, executive vice president and general counselfor Abbott. "The company takes its responsibility to patients and healthcareproviders seriously and has established robust compliance programs to ensureits marketing programs meet the needs of health care providers and legalrequirements."

Depakote is primarily an epilepsy medication,though it had also been approved for bipolar mania and migraine prevention, butthe various plaintiffs charged that it had marketed it for unapproved uses,including dementia.

"Not only did Abbott engage in off-labelpromotion, but it targeted elderly dementia patients and downplayed the risksapparent from its own clinical studies," said Acting Associate Attorney GeneralTony West of the U.S. Justice Department in an official statement. "As this criminaland civil resolution demonstrates, those who put profits ahead of patients willpay a hefty price."

"Abbott admits that from 1998 through 2006, thecompany maintained a specialized sales force trained to market Depakote innursing homes for the control of agitation and aggression in elderly dementiapatients, despite the absence of credible scientific evidence that Depakote wassafe and effective for that use," the Justice Department said in its statementfollowing the settlement agreement.

In addition, Abbott marketed Depakote for use withvaroious antipsychotic drugs to treat schizophrenia, "even after its clinicaltrials failed to demonstrate that adding Depakote was any more effective thanan atypical antipsychotic alone for that use," according to the JusticeDepartment.

Under U.S. law, physicians are allowed toprescribe pharmaceuticals for any condition provided the drug is licensed andapproved by the U.S. Food and Drug Administration and has been shown to be safeand effective. However, companies aren't allowed to promote their drugs foruses other than those for which they were approved.

Meredith McCoyd, a former Abbott sales executivein Atlanta, was the first person to come forward with allegations regarding theAbbott's off-label marketing of Depakote, and she was represented by the lawfirm Grant & Eisenhofer as she became the lead whistleblower. It was her complaintin 2007 that launched the government investigation, the firm says, and theJustice Department formally intervened in her case in 2011. As part of thesettlement, McCoyd receives a multimillion-dollar bounty mandated by federalwhistleblower law.

Among other claims, McCoyd asserted that Abbottheavily marketed Depakote to nursing homes as a means of sedating patients inorder to lower staffing ratios. The company was also charged with encouragingdoctors to prescribe Depakote to young children outside the scope of itsFDA-approved label for epilepsy and migraines.

"Abbott's unlawful practices showed how thecompany elevated aggressive sales and marketing of Depakote over medicaldecision-making, violating basic norms of healthcare and ethics," said Grant& Eisenhofer partner Reuben Guttman, who was lead counsel to McCoyd. "Abbottessentially preyed on two of the most helpless patient populations in childrenand Alzheimer's patients."

Abbott pays big price to settle on Depakote

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Jeffrey Bouley

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