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Qui Tam: Pharma 101 - Pharmaceutical Fraud
Abbott Labs Pays $1.5 Billion to Quiet Off-Label Promotion Allegations, Company Promises Not to Compensate Sales Representatives for Future Off-Label Sales
By Nolan and Auerbach
This week, the United States Department of Justice announced that Abbott Laboratories Inc. has pleaded guilty to a criminal misdemeanor and has agreed to pay $1.5 billion to resolve its criminal and civil liability arising from the company?s alleged off-label promotions of the prescription drug Depakote.
The FDA had only approved Depakote for three uses: epileptic seizures, bipolar mania and the prevention of migraines. According to the Government, Abbott pushed the drug for a whole host of unapproved ailments and uses, including behavioral disturbances in dementia patients, psychiatric conditions in children and adolescents, schizophrenia, depression, anxiety, conduct disorders, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal, attention deficit disorder, and autism.
Notably, the government brought out the criminal hammer when it came to Abbott?s promotion of Depakote as a means to control agitation and aggression in elderly dementia patients. According to the government, Abbott specifically trained its sales force to promote this off-label use to nursing home providers and employees. The sales force would tout Depakote as advantageous over antipsychotic drugs for controlling agitation and aggression in dementia patients because Depakote was not subject to certain federal laws and regulations that are designed to prevent the use of unnecessary medications in nursing homes.
In addition, the government accused Abbott of illegally lining the pockets of various health care providers, in violation of the federal Anti-Kickback Statute. For example, Abbott allegedly entered into contracts that provided long-term care pharmacy providers with payments of rebates based on increased usage of Depakote in nursing homes serviced by the providers. Under these contracts, Abbott paid untold millions of dollars in rebates to the pharmacy providers.
The $1.5 billion payout is the second largest payment ever by a pharmaceutical company. This hefty sum includes a criminal fine and forfeiture totaling $700 million and civil settlements with the federal government and the states totaling $800 million. The four whistleblowers who filed the precipitating False Claims Act qui tam actions received $84 million from the federal share of the settlement amount.
This global settlement did include an interesting wrinkle: The company agreed not to compensate sales representatives for off-label sales for the next five years.
More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.
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