Abbott pays $1.6bn for promoting off label use of valproic acid

The drug company Abbott Laboratories has agreed to pay $1.6bn (£0.9bn; €1.2bn) in penalties for improper promotion of the drug Depakote (valproic acid) in the US. The settlement is the second largest by a drug manufacturer and ends a four year investigation by federal and state officials.

The company acknowledged training a workforce to promote off label use of the drug to nursing homes to control agitation and aggression in older schizophrenia patients and in patients with dementia. The judgment says that Abbott also made illegal payments to doctors and pharmacists to encourage them to promote or prescribe valproic acid outside its licensed indications.

“Not only did Abbott engage in off label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical trials,” said Tony West, acting associate Attorney General at a news conference in Washington, DC on 7 May.

Abbott closed a trial of Depakote in patients with dementia in 1999 because of increased incidents of adverse events.

The Justice Department said Abbott waited nearly two years to tell its sales force that a schizophrenia trial that looked at adding Depakote to another drug failed to show any statistically significant benefit beyond the initial drug. And it waited four years before publishing the trial results. It continued to promote combination use of Depakote to treat schizophrenia throughout the entire period.

“As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price,” said West.

The settlement consists of $800m in civil charges and $700m in criminal charges that will go to the federal government and states. States will receive an additional $100m to resolve consumer protection claims.

Abbott will be on probation for five years, having to regularly report its compliance activities to the court. It also has entered into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of the Inspector General, which holds the company’s board of directors responsible for compliance in these areas.

Former Abbott sales representatives turned whistleblowers will share $84m for helping to uncover and prove the illegal activity, as the law allows.

James Cole, deputy Attorney General, said the settlement is important for what it says about the Obama administration’s “efforts to protect the integrity of programs like Medicare and Medicaid.” A special antifraud unit formed in May 2009 has recovered $8.85bn through settlements and other legal actions.

Abbott issued a brief press release summarising the terms of the settlement. General counsel Laura Schumacher said, “We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement.”

Industry analysts believe that this will have minimal financial impact on Abbott because it wrote off $1.5bn last autumn towards a potential settlement.

The agreement tidies up a major pending issue in preparation for the company’s planned split into two publicly traded corporations by year’s end. One entity will focus on research into prescription drugs, the other on diversified medical products.