Laboratories (Abbott), an Illinois company, will pay over $1.6 billion in penalties to the federal government and several states related to its alleged illegal
promotion of the prescription drug Depakote for off-label uses, as
announced by the settling parties on May 7, 2012. Specifically, the
government has alleged that the Company:
marketed Depakote, in nursing homes for the control of
agitation and aggression in elderly dementia patients between 1998
and 2006, a use not approved by the the Food and Drug
unlawfully promoted Depakote for a broader set of unapproved,
non-medically accepted uses for which Medicare and Medicaid could
not reimburse providers between 1998 and 2008, and
made false and misleading statements about the safety,
efficacy, dosing and cost-effectiveness of Depakote for some of
these unapproved uses.
The proposed settlement includes the following terms:
Civil False Claims Act (FCA) violations: $800 million
Five-year Corporate Integrity Agreement
Medicare and other federal health care programs: $291
Medicaid: $239 million to the states and $270 million to the
Criminal Food, Drug and Cosmetic Act (FDCA) violations: $700
Five-year term of probation for pleading guilty to
Federal Fine: $500 million
Criminal Asset Forfeiture Penalties: $198.5 million
Investigative Costs to the Virginia Medicaid Fraud Control Unit
(MFCU): $1.5 million
State Consumer Protection Laws: $100 million
The civil FCA component of the settlement resolves allegations
presented in four whistleblower qui tam actions filed in
the Western District of Virginia in late 2007; the whistleblowers
who filed the suits will share an award of $84 million out of the
settlement proceeds. Forty-four states and the District of Columbia
will share the proceeds of the state consumer protection
The settlement is significant for at least two reasons. First,
according to the Virginia Attorney General and the Department of
Justice, the FDCA component of the settlement is the second
largest payment by a drug company for such conduct. Second, the
$100 million state consumer protection settlement is the largest
settlement paid by a drug company under those laws. This settlement
is the latest in a trend toward use of state consumer protection
laws to increase recoveries to states, as evidenced most recently
by the $1.1 billion judge's award after a jury
trial against a Johnson & Johnson subsidiary for violating the
Arkansas Deceptive Trade Practices Act. Moreover, this settlement
– specifically, the large number of states that will
share in the monetary proceeds – demonstrates that
federal and state governments continue to cooperate with each other
to pursue health care enforcement cases.
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