Wednesday, May 9, 2012

Abbott Labs $1.5 Billion Plea and False Claims Act Settlement: the Facts at Issue

By now, Readers, I am sure you have heard of the announcement this week by the U.S. Department of Justice that Abbott Labs has agreed to pay $1.5 billion  in a False Claims Act settlement and a criminal plea regarding its off-label promotion of its drug, Depakote. A number of blogs have covered it including Sidley's Original Source blog as well as MintzLevin's Health Law & Policy Matters blog, both of which I commend to you.  The four relators will receive $84 million of the $800 million paid for the False Claims Act portion of the settlement.

I suspect that some Readers may think this settlement --one of many settlements against pharma companies alleging the promotion of off-label drug usages-- may be just another instance in which the government has overreached and used it power to extract a ruinous settlement from the defendant.  A review of the facts admitted to by Abbott, however, shows that the company's conduct was reprehensible and that this settlement and the criminal charge against it could have been far worse.  The company clearly benefited from great counsel, including former Deputy Attorney General, Mark Filip.

According to the Agreed Statement of Facts for its plea, Abbott's gross sales of Depakote from 1998 - 2008 were roughly  $13.8 billion.  During an 8 year period, Abbot promoted the sale and use of Depakote primarily for the elderly suffering from dementia and for the treatment of schizophrenia, even though it knew that the drug was not effective for the treatment of such conditions.  For example, Abbott conducted a study of the effects of Depakote in 1998-99, but suspended the study due to an "increased incidence of adverse events in the Depakote treatment group," discontinuing it completely in 1999.  The study failed to show that Depakote was effective in treating mania in elderly dementia patients.  Abbott performed another clinical trial on dementia patients in 2000, but according to Abbott, the trial was "terminated for low enrollment  . . . . . [and was] seriously underpowered and definitive conclusions from the data were not possible."  Abbott conducted no other studies, but another 153 patient randomized study was done on the use of Depakote for treatment of elderly patients with dementia in 2000 - 2002, and it concluded that "treatment with [Depakote] did not show benefit over placebo in the treatment of agitation associated with possible or probable [Alzheimer's disease] . . . in nursing home residents included in this trial."

Notwithstanding the lack of evidence of Depakote's efficacy in the treatment of dementia, for several years Abbott engaged in widespread promotion of Depakote as effective for controlling agitation and aggression in elderly dementia patients. Abbott informed its own sales force that "Depakote had been shown effective  . . . to treat behavioral disturbances in dementia patients . . . " and developed "educational programs" to promote the drug's usage for the elderly.  It gave funds for speaker programs to promote the use of Depakote to control agitation and aggression in elderly patients with dementia. It sent out a letter to 4,000 prescribers of atypical antipsychotic drugs and to 1,000 prescribers of another drug to nursing home patients to "help increase overall the use of Depakote  . . . for patients with dementia related behaviors."  The Statement of Facts describes a whole host of things that Abbott did to market Depakote --a drug which had not been proven effective, and in fact appeared to be ineffective, for treating agitation and aggression in elderly dementia patients.  The Statement of Facts reflect similar conduct by Abbott in the marketing of Depakote as a treatment of for schizophrenia

The False Claims Act Settlement reflects Abbott's admission that Medicare and Medicaid paid "hundreds of millions of dollars for claims resulting from the use of Depakote for the control of the agitation and aggression of dementia patients" and paid "millions of dollars for claims resulting from the use of Depakote to treat schizophrenia."

The key documents relating to Abbott's plea and settlement can be found here at the Department of Justice's site.

A. Brian Albritton
May 9, 2012

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