On May 7, the Department of Justice announced that Abbott Laboratories has agreed to plead guilty to a criminal charge of misbranding and agreed to pay $1.5 billion to resolve criminal and civil claims for alleged off-label promotion. In an agreed statement of facts, Abbott admitted that from 1998 through 2006, it maintained a specialized sales force trained to market the drug 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. Abbott also admitted that from 2001 through 2006, it 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 $1.5 billion settlement is the second largest ever by a pharmaceutical manufacturer. Over half ($800 million) of the amount is being paid to settle FCA claims by the federal and state governments that the challenged conduct caused false claims to be submitted as a result of the conduct underlying the criminal plea (to which Abbott stipulated) and allegations of unlawful kickbacks (which Abbott denied). Four relators will receive a total of $84 million from the federal government’s share of the settlement. The remaining $700 million consists of a criminal fine of $500 million, a forfeiture of assets of $198.5 million, and a payment of $1.5 million to the Virginia Medicaid Fraud Control Unit. Among the conditions of its probation are that Abbott must report any “probable” violation of the Food, Drug, and Cosmetics Act to the probation office, and is prohibited from compensating sales representatives for off-label sales.
Documents relating to the settlement can be found here:
The U.S . Department of Health and Human Services has released its Fiscal Year 2013 “Budget in Brief,” an overview of how HHS proposes to spend the close to $1 billion in budget authority for HHS requested in President Obama’s 2013 budget request. Program integrity is a top priority, with HHS noting that over the last three years, Health Care Fraud and Abuse Control (which comprises $610 million of the budget request) has produced a “return on investment” of $7.20 for every dollar spent. Among the key initiatives these funds will support are a continued emphasis on improper fee-for-service payments by Medicare, expansion of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) task forces, and “an increased focused on civil fraud, such as off-label marketing and pharmaceutical fraud.” (page 62).