ABBOT LABORATORIES INC., MUST PAY $700 MILLION IN FINES AND FORFEITURES

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, October 2, 2012

Judge Imposes $500 Million Fine and $198.5 Million Forfeiture for Illegal Marketing

Pharmaceutical manufacturer Abbott Laboratories Inc. was sentenced by U.S. District Court Judge Samuel G. Wilson of the Western District of Virginia in connection with its guilty plea related to its unlawful promotion of the prescription drug Depakote for uses not approved as safe and effective by the Food and Drug Administration (FDA) the Justice Department announced today. Abbott, which was ordered to pay a criminal fine in the amount of $500 million, plus a forfeiture of $198.5 million, and $1.5 million to the Virginia Medicaid Fraud Control Unit, will also be subject to a five-year term of probation.

In May 2012, Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote in violation of the Federal Food, Drug and Cosmetic Act (FDCA). Abbott’s criminal plea related to the misbranding of Depakote by promoting the drug to control behavioral disturbances in dementia patients and to treat schizophrenia when neither of these uses was approved by the FDA. Under the provisions of the FDCA, a company is required to specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for "off-label" uses – unless the company applies to the FDA for approval of the additional use. In an agreed statement of facts, Abbott admitted that from January 1998 to December 2006 it marketed Depakote off-label to treat behavioral disturbances in dementia patients, and from January 2002 to December 2006, Abbott marketed Depakote off-label to treat schizophrenia.

Under the terms of the plea agreement, Abbott agreed to pay the second-largest criminal fine for a single drug, executed a fulsome statement of facts (with exhibits) revealing the extent of its unlawful conduct, admitted that it engaged in misleading statements, and submitted to a five-year term of probation. Under the terms of its probation, on an annual basis, Abbott’s CEO and board of directors will need to personally certify that the company is complying with the law.

Abbott’s guilty plea was part of a global resolution involving its illegal promotional activity. Abbott also entered into a civil settlement agreement under which it agreed to pay $800 million to the federal government and the states to resolve claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government healthcare programs. The parallel civil settlement covered a broader range of conduct by Abbott. The settlement resolved allegations that in addition to off-label marketing for dementia and schizophrenia, Abbott also marketed Depakote for other psychiatric conditions in adults, including depression, anxiety, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal and psychiatric conditions in children, including conduct disorders, attention deficit disorder and autism.

In addition to the criminal and civil resolutions, Abbott also agreed to enter into an expansive 5-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services (HHS-OIG) that requires enhanced accountability, increased transparency, and wide-ranging monitoring activities conducted by both internal and independent external reviewers.

"Today’s sentencing confirms that the resolution we reached with Abbott in May is the right result. And it emphasizes the importance of the U.S. government’s coordinated efforts to combat health care fraud. We expect companies to make honest, lawful claims about the drugs they sell, we will be vigorous in our enforcement efforts when they break the law, and the courts will hold them accountable." said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.

　

"Abbott unlawfully targeted a vulnerable population, the elderly, through its off-label promotion. The court’s sentence makes clear that those who engage in such conduct will be prosecuted and held accountable," said Timothy Heaphy, U.S. Attorney for the Western District of Virginia.