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Abbott Labs Hit with $1.5B Penalty for Fraud in Drug Marketing

Abbott Labs Hit with $1.5B Penalty for Fraud in Drug Marketing

In what was the second-largest settlement of its kind, pharmaceutical giant Abbott Laboratories agreed to pay more than $1.5 billion to settle civil and criminal charges related to unlawful marketing of the drug Depakote. The case began with four whistleblower actions under the federal False Claims Act, which allows insiders with knowledge of fraud against the U.S. government to bring lawsuits and share in the government’s recovery.

The settlement consists of an $800 million civil settlement, of which the qui tam plaintiffs can receive 15 to 30 percent, and a $700 million criminal fine. Abbott’s CEO and Board of Directors are also subject to court-supervised probation and reporting requirements.

Abbot’s egregious behavior targeted elderly dementia patients in a coldly calculated scheme to exploit their vulnerability for financial gain. Depakote has FDA approval for only three purposes: epileptic seizures, bipolar mania, and migraine headaches. Despite clinical evidence that Depakote caused sleepwalking, dehydration, and anorexia in elderly study patients, Abbot aggressively marketed the drug for controlling agitation and aggression in elderly patients who suffer from dementia.

This aggressive marketing included:

  • Training its sales force to promote Depakote as a cost-effective alternative to drugs that were subject to provisions of the Omnibus Budget Reconciliation Act of 1987 (OBRA), so nursing homes could save on OBRA compliance costs.
  • Providing millions of dollars in rebates to nursing homes based on their increased use of Depakote
  • Creating programs and materials to train pharmacists in off-label uses of Depakote, and paying millions in rebates to pharmacists who recommended off-label use.

This case has to rank as one of the most cynical and exploitative examples of a drug company putting profits before patients. Exploiting vulnerable seniors who have lost the capacity to advocate for themselves is simply unconscionable, but unfortunately, there’s more.

From 2001 through 2006, Abbott also encouraged unlawful, off-label use of Depakote to treat schizophrenia. The company sponsored two studies to test the drug for this purpose, and both studies found no efficacy for the use of Depakote. Despite these clinical results, Abbott waited almost two years to inform its sales force and another two years to publish the findings. Instead, the company continued to promote off-label use of Depakote to treat schizophrenia.

Fortunately, insiders with knowledge of Abbott’s criminal fraud came forward and started the process that eventually delivered justice.

“The employee who, in the public interest, has the personal courage to challenge illegality is a kind of public hero.”