Payment may be largest ever in single-drug case in history of False Claims Act; 4 ½ year investigation revealed Depakote was illegally marketed for children and geriatric patients; doctors given kickbacks
WASHINGTON, DC (May 7, 2012) – U.S. Justice Department and several state Attorneys General, has reached a $1.6 billion settlement with Abbott Laboratories over its illegal marketing of antiepileptic medication Depakote to children and geriatric patients.
The settlement was reached between Abbott (NYST: ABT) and the Justice Department, along with attorneys general in numerous states who have been conducting a 4 ½ year investigation into the Chicago-based pharmaceutical manufacturer. Prosecutors accused Abbott of violating federal FDA regulations and federal and state false claims act laws in its marketing of Depakote, a powerful anti-seizure medicine.
Abbott’s payment is one of the largest ever in the history of the False Claims Act, which includes $800 million in civil payments, along with a $700 million criminal penalty, and an additional $100 million to settle state consumer protection claims, for a total of $1.6 billion. Meredith McCoyd, a former top-performing Abbott sales representative based in Atlanta, who was the first to come forward with allegations regarding Depakote. Ms. McCoyd is the lead whistleblower relator, whose complaint initiated the government’s investigation of Abbott. The Justice Department intervened in her case last year.
Ms. McCoyd’s case, originally filed under seal in 2007 in the U.S. District Court for the Western District of Virginia, alleged use of illicit incentive payments by Abbott to physicians to encourage prescription writing of Depakote, as well as misrepresentations of the drug’s safety and efficacy, and off-label marketing. Abbott reportedly generated over $1.4 billion per year in sales of Depakote throughout the 2000s before the drug went off-patent.
The settlement stems from charges that over a period of years Abbott instructed its national sales team to market Depakote for treatments outside the FDA’s approved usage, which includes use for treating epileptic seizures, migraines and bipolar mania in adults. Among other illegal ploys, Abbott was accused of heavily marketing the drug to nursing homes as a method of sedating elderly residents, including those with Alzheimer’s and dementia and, in the process, allowing nursing home facilities to maintain lower staff-to-patient ratios. Abbott was also charged with encouraging doctors to prescribe the drug to young children outside of its FDA approved label for epilepsy and migraines.
Abbott was further accused of misrepresenting the safety and efficacy of Depakote, which can have serious side effects, including somnolence and increased risk of falls in the elderly and polycystic ovary syndrome in teenage girls. The company was charged with providing kickbacks to doctors and making misrepresentations to nursing homes about the reporting requirements for Depakote under the Omnibus Reconciliation Act.
According to Ms. McCoyd’s complaint: “This case is about a company – Abbott Laboratories – that methodically and recklessly endangered this vulnerable population – those with Alzheimer’s and other forms of dementia – through the illegal marketing of a drug that Abbott knew was unapproved for the treatment of Alzheimer’s, did not work to treat the disease, and was actually dangerous for use by the elderly. Incredibly, Abbott did not limit its wrongful conduct to preying upon the elderly; it also unlawfully marketed Depakote, to an array of patient populations, including children, placing them at risk for life altering injury or illness.”
“The size of this settlement demonstrates the seriousness of Abbott’s illegal actions. The company placed vulnerable elderly and pediatric patients at extreme risk by marketing Depakote for purposes not approved by the FDA and by paying kickbacks to induce doctors to write prescriptions,” said Reuben Guttman. Mr. Guttman and Traci Buschner, of Guttman, Buschner and Brooks PLLC, served as lead counsel for Ms. McCoyd.
“Abbott’s unlawful practices showed how the company elevated aggressive sales and marketing of Depakote over medical decision-making, violating basic norms of health care and ethics. Abbott essentially preyed on two of the most helpless patient populations in children and Alzheimer’s patients,” Mr. Guttman added.
“Abbott directed its sales force to get Depakote widely used in nursing homes, principally to neutralize older patients as a substitute for proper staffing,” Mr. Guttman said. “We are extremely gratified that the Justice Department and participating state AGs ensured that Abbott would pay a significant penalty for its rampant off-label practices.”
“With health care fraud projected to top $60 billion annually, cases such as this should serve as a catalyst for lawmakers to take a hard look at the pharmaceutical industry,” Mr. Guttman continued. “What happened here with Abbott was a train wreck. Now is the time for Congress to create a pharmaceutical and medical device safety and investigation board, which would conduct investigations with an eye toward providing honest information and analysis to practitioners.”