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Abbott Laboratories to pay $1.6 billion over misbranding drug

By Terry Frieden, CNN Justice Producer, and Tom Watkins, CNN
updated 6:29 PM EDT, Mon May 7, 2012
  • Professor of psychiatry questions deterrent effect of the fine
  • Civil settlements with states and the federal government total $800 million
  • It includes a criminal fine of $700 million
  • The company maintained a specialized sales force to tout off-label uses

Washington (CNN) -- Abbott Laboratories has pleaded guilty and agreed to pay $1.6 billion to resolve its criminal and civil liability arising from the company's unlawful promotion of the prescription drug Depakote, the U.S. Justice Department said Monday.

Acting Associate Attorney General Tony West said it was case of Abbott putting "profits ahead of patients."

The total includes a criminal fine of $700 million and civil settlements with the states and federal government totaling $800 million. Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote.

Separate from the DOJ settlement, Abbott agreed to pay 45 states a total of $100 million to resolve liability under the state consumer-protection laws.

That makes this the second-largest fraud settlement involving a drug company, behind only the $2.3 billion Pfizer settlement in 2010. It is the third-largest fraud settlement against the government in any field.

Abbott pleaded guilty to misbranding Depakote by promoting the drug to control agitation and aggression in patients with elderly dementia and to treat schizophrenia when neither use was approved by the Food and Drug Administration, the Justice Department said.

Abbott will be subject to court-supervised probation and reporting obligations for Abbott's CEO and board of directors.

Justice Department officials said they were unable to link the illegal prescriptions to any deaths.

"This is an elder abuse case," U.S. Attorney Timothy Heaphy of the Western District of Virginia told reporters.

Top Justice Department officials led by Deputy Attorney General James Cole were joined by Virginia state officials who began the investigation after they were approached by whistle-blowers.

Officials said the federal government will receive about $560 million from the civil settlement. The total expected to be divided among all 50 states is about $240 million. The whistle-blowers will receive a total of $84 million.

Heaphy said Abbott earned about $13 billion from Depakote sales during the period investigated, but he said it was difficult to determine how much of that was the result of sales for illegal purposes. He expressed confidence that, once the fines are factored in, Abbott will not have profited from the improper practices.

"We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement," said Laura Schumacher, executive vice president and general counsel for Abbott, in a statement issued from the company's offices in Abbott Park, Illinois. "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."

Under the law, a drug maker's promotional activities must be limited to uses approved by the FDA. Promotion by the manufacturer for "off-label" uses renders a product misbranded.

In this case, Abbott pleaded guilty to misbranding Depakote by promoting the drug for off-label uses.

The company admitted that from 1998 through 2006, it "maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use," the Justice Department said in a news release.

"In addition, from 2001 through 2006, the company marketed Depakote in combination with atypical antipsychotic drugs to treat schizophrenia, even after its clinical trials failed to demonstrate that adding Depakote was any more effective than an atypical antipsychotic alone for that use."

The FDA approved Depakote only for epileptic seizures, bipolar mania and the prevention of migraines.

In 1999, Abbott discontinued a trial of Depakote in the treatment of dementia due to adverse events that included drowsiness, dehydration and anorexia.

Abbott trained its sales force to promote the drug to health care providers and employees of nursing homes as better than antipsychotic drugs for controlling agitation and aggression in elderly dementia patients, the release said.

Abbott sales representatives touted the fact that Depakote was not subject to certain provisions of the Omnibus Budget Reconciliation Act of 1987 and its regulations intended to prevent medications from being used unnecessarily in nursing homes, it added.

"Exploiting the fact that certain OBRA provisions did not yet apply to Depakote, Abbott sales representatives stated that by using Depakote, nursing homes could avoid the administrative burdens and costs of complying with OBRA," the news release said.

The company wound up giving millions of dollars in rebates to pharmacists at long-term-care facilities that were based on increases in the use of the drug in nursing homes they serviced, the news release said.

"In addition to using its sales force to promote the drug to health care providers and employees of nursing homes, Abbott created programs and materials to train the pharmacy providers' consultant pharmacists about the off-label use of Depakote to encourage them to recommend the drug for this unapproved use," it added.

"Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies," said West, the acting associate attorney general. "As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price."

The company also admitted that, from 2001 through 2006, it marketed the drug to treat schizophrenia. Though the company paid for two studies of the use of Depakote to treat schizophrenia, neither met the goals established for the study, it said.

"When the second study failed to show a statistically significant treatment difference between antipsychotic drugs used in combination with Depakote and antipsychotic drugs alone, Abbott waited nearly two years to notify its own sales force about the study results and another two years to publish those results," it said. During that time, the company continued to promote the drug for the treatment of schizophrenia.

Despite this incident, Abbott will continue to be able to sell its drugs through government programs, a Justice Department spokeswoman said.

Such off-label marketing is not unusual among drug companies, said David Antonuccio, an emeritus professor of psychiatry and behavioral sciences at the University of Nevada School of Medicine. "To a lot of companies, the risks of punishment for off-label marketing are part of the cost of doing business," he said. "I think it's an open question about whether that fine will have the deterrent effect that it's hoped to have."

Antonuccio noted that drugs are not approved for certain indications because evidence does not exist to satisfy the FDA that they are safe and effective for those purposes. "For the drug companies to promote these practices means they're promoting practices that don't have scientific support for safety and efficacy. That's a problem. It exposes people to unknown risk."

Abbott plans to separate into two publicly traded companies by the end of the year.

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Showing 25 of 382 comments

  • LupronVictim 1 comment collapsed Collapse Expand

    Another day, another multi-billion dollar fine for Abbott Labs' illegal marketing.  I salute the DOJ but unfortunately these gigantic fines do nothing to restore the health of the injured patients.  The FDA needs to stop approving unsafe or unnecessary drugs and remove them from the market.  I hope the DOJ will now turn its attention to Lupron, which is commonly used off-label for IVF, merely for the scheduling convenience of doctors, despite a link to birth defects and many other grevious injuries.

  • Picco 1 comment collapsed Collapse Expand

    These corporations with their shady practices need to be taken out of the private sector and taken over by the feds when they transgress like this.  There are never any REAL consequences.

  • BiasObserver 2 comments collapsed Collapse Expand

    All these CEOs were once Harvard grads that stood in protest lines and believed in causes.

  • sonicblew 1 comment collapsed Collapse Expand

    The same causes the women they were trying to bed believed in, I'd wager.  People that can afford Harvard and the like have nothing to protest of any real importance.  

  • sonicblew 3 comments collapsed Collapse Expand

    This is going to put me on another watch list, but why again are we not embracing natural medicine?  Not just marijuana, either.  Don't forget that aspirin was derived from the bark of the willow tree and that penicillin was cultivated by accident.  My point is, we know many elements of nature have therapeutic properties, let's can the synthesized compounds and clinical studies.

    Indigenous tribes in all parts of the world have all each independently found natural medicine or remedies in their local habitat, that's how medicine worked basically until the Hippocratic Oath era.

  • sonicblew 1 comment collapsed Collapse Expand

    sigideba Yeah, I kinda went in a different direction, only mentioning marijuana once (twice, now).  Besides, I'm already on the important ones anyway I suspect.  Except the no-fly lists, but until the TSA decides my genitalia is not a makeshift bomb I'll avoid the molestation.

  • sigideba 1 comment collapsed Collapse Expand

    lol, that's not going to land you on a watch list, hippy.

  • larry051967 1 comment collapsed Collapse Expand

    If they don't start putting high ranking officials in jail nothing is going to happen. The settlement amounts look like big numbers but most of them are a drop in the bucket compared to their operating capital. The justice system in place now under Eric Holder has to be careful because it's campaign time. I just wish for one time Holder would step up and do what's right for the citizens at large.

  • Amobius 1 comment collapsed Collapse Expand

    The sad part is this medication is actually quite useful for the indications they are being sued over, actually works better than some of the long term standards of therapy with less side effects.  

  • komododr 1 comment collapsed Collapse Expand

    HUGE HEADLINES OF BIG SETTLEMENT. In reality though the actual pay off is only a fraction of the reported settlement amount. That is because underneath the headline, the company involved is allowed to pay a fraction if it agree to certain terms. The company agree to huge amount to make government prosecutors look good. The FDA, hahaha, there's a term in contradiction. Its like the Fox guarding the chicken coop. Almost all members of the FDA advisory committee works for the drug companies.

  • komododr 3 comments collapsed Collapse Expand

    Drug companies eagerly pays the fine. They protect the thousands of doctors who prescribe the medication knowing it is not an approved use. Doctors enjoy the perks provided by drug companies such as lavish vacations. Who knows it probably include cash payments under the table. The VA wanted to buy drugs for vets in Canada. Its the same drug made by the same company. Yet they complain to Congress that yes the drugs are cheaper but the drug company testified in Conress it cannot vouch the quality of the drug. Of course drug companies spent $$$millions lobbying members of congress. But smart Americans continue to cross the border into Canada to buy their prescription drug because it is way, way cheaper.

  • LupronVictim 1 comment collapsed Collapse Expand

    This is directed at frankland99.  I was butchered by a doctor who prescribed a dangerous drug made by Abbott Labs which wasn't necessary for my treatment.  Later I found out the doctor is married to a drug company executive.  In light of Abbott pleading guilty in the article above, it is ridiculous for you to argue that illegal marketing ended ten years ago.  Google Abbott, heart stents, and pig roast if you if you don't believe it still goes on.

  • frankland99 1 comment collapsed Collapse Expand

    what are you talking about? what lavish vacation? cash payments under the table? what country do you live in? Been practicing medicine for 42 years and have never ever seen or been offered cash incentives. The vacation stuff ended about 10 years ago. Pharma folks have to send their powerpoint slides to regulators before they give a private talk. The next time you are sick in the hospital, I have a strong feeling you are not going to want that generic medication, but instead the FDA approved, but not yet generic 20,000 dollar treatment to get you out of sepsis. No, I didnt make up that number, look of how much xigris costs. If you dont allow for capitalist interests to drive innovation, I assure you, you will soon have a Soviet like list of medications that are available for your choosing. 

  • Golt 2 comments collapsed Collapse Expand

    A few years ago I went to a doctor to get my injured knee examined.  The first and last thing out of his mouth was, "Would you like some pain-killers?"  I never complained of having any pain, just instability in my knee.  Yet he kept pushing the pain-killers.  I will never consume any of the addictive synthetic narcotics produced today unless perhaps I find myself in excruciating pain.  In such instance, we're all vulnerable.  It's a scam.  Doctors get paid big bucks to "push" unnecessary drugs on their patients.  Even the "street pharmacist" doesn't resort to "pushing" drugs.  The term "drug pusher", when applied to street dealers, is nothing more than a derogatory lie.  They don't "push" anything.  People find them, not the other way around. So who should I respect more?   

  • Anon1456 1 comment collapsed Collapse Expand

    I have chronic kidney stones and I get the same thing. I do not want to be a vegetable so I just deal with the pain.  I quit drinking coffee and sodas and I am doing OK. Would I have done that if I was heavily medicated? Probably not. 

  • Nitroindole 1 comment collapsed Collapse Expand

    Not a big surprise to me. Last fall I have reviewed the Abbott's PEDIALYTE, a product "designed" for children. It is identical to GATORADE by content but 5 times more expensive!
    Go DyeDiet to read the original article:  Pedialyte: Time to poison your child. We need EDUCATE ourselves to not be fooled all the time.

  • Fr33Th1nk3r 2 comments collapsed Collapse Expand

    Disgusting. I always knew those pschiatric drugs were bogus. They just want you to think there's something wrong with you when there's not. There's a fracking pill for everything nowadays. 

  • cadwl 1 comment collapsed Collapse Expand

     Depakote is approved for use as an anti-seizure medication. It -is- an effective drug, when used to treat the proper, approved diagnosis.

    Psychiatric medication, when empirically and rigorously tested, is not bogus.

  • Bernadine Gillette 3 comments collapsed Collapse Expand

    I'm just glad to see the pill pushing for profit and not your well being jerks finally being taken a hard look at and held accountable.   

  • Bernadine Gillette 1 comment collapsed Collapse Expand

    Too true Anon. 

  • Anon1456 1 comment collapsed Collapse Expand

    Nice post, but it won't happen.  What makes the headlines is a huge judgement, what makes page 35 five years later is the actual amount they had to pay.

  • readerz 1 comment collapsed Collapse Expand

    And another big loser about 10 years ago... TAP Pharmaceuticals for bribing urologists to prescribe Lupron (brand name for a GNRh agonist drug affecting the pituitary gland in the brain) for prostate cancer.  The doctors still do that, but although it temporarily lowers testosterone, it does little to control the cancer, and its side effects can be depression and dementia.  The FDA receives a "fee" (read bribe") when drugs are approved; in the case of Lupron, those who tested the drug for safety and effectiveness were on the board of TAP; strange coincidence?  And that was not enough profit, so they prescribed the same drug to women with endometriosis too; reducing estrogen temporarily, but with the same terrible side-effects.

  • Chris Grau 1 comment collapsed Collapse Expand

    And people will still take these pills while telling others how bad Marijuana is. Funny how something can be passed through to the public without being FDA approved, KILL....and then get fined,but cannibas is evil to so many. Medicinal talk here, not recreational.

  • Anon1456 4 comments collapsed Collapse Expand

    I can't get a job because I have a criminal record(not really).  Will Abbott Labs face a problem like that? Is the Government going to ban them from medicare or medicaid payments?   If you don't have to serve the time, why not commit the crime?

  • readerz 1 comment collapsed Collapse Expand

    It infuriates me that these drug corporations have no criminal liability, only civil.  They get to be persons when it comes to donating to super pacs, but not where liability is concerned.  Even those who commit fraud in businesses go to jail, but not big pharma.


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