June 3rd, 2011

Abbott Labs In Talks To Settle US Probe Of Depakote Marketing

The Wall Street Journal

Abbott Laboratories (ABT) has held talks to settle a government probe of whether the company illegally promoted anti-seizure drug Depakote for uses not approved by regulators, according to a court document.

The U.S. Justice Department said in a May 20 court filing “the parties are engaged in active settlement discussions.” Prosecutors asked a federal judge in Virginia to postpone a deadline for certain court proceedings until July 8 to allow time for a potential “negotiated resolution.”

The Justice Department didn’t state how much money Abbott might agree to pay, or whether a settlement would include a criminal guilty plea, as some recent drug-industry settlements have. Settlements by other drug companies in recent years have run into the hundreds of millions of dollars, with some exceeding $1 billion.

Officials with the U.S. Attorney’s Office in Roanoke, Va., who are leading the probe, couldn’t be reached.

“We continue to cooperate with the investigation,” said Abbott spokesman Scott Stoffel, declining to comment further.

Depakote, approved to treat epilepsy and bipolar disorder and to prevent migraines, was once one of Abbott’s best-selling drugs, racking up $1.6 billion in sales for 2007, before patent expirations cleared the way for cheaper generic competition.

The Justice Department is investigating whether Abbott violated civil or criminal laws by marketing Depakote as a treatment for agitation, aggression in the elderly and other uses not approved by the Food and Drug Administration.

Drug makers are generally barred from actively promoting “off label” uses of their drugs, though doctors have the discretion to prescribe off label.

Similar allegations were raised in four lawsuits filed against the Abbott Park, Ill., company between 2007 and 2010. The lawsuits--brought by former and current Abbott sales employees at the time they were filed--say the company’s off-label marketing of Depakote beginning in the late 1990s caused false claims for prescription reimbursement to be submitted to government health programs including Medicaid.

The people who filed the lawsuits may be eligible to receive a portion of any monetary settlement, under federal and state laws encouraging whistleblowers to report suspected health-care fraud to the government.

Last year, a federal judge ordered Abbott to hand over to prosecutors some of Chief Executive Miles White’s email messages. The U.S. Attorney’s Office in western Virginia had demanded copies of the emails as part of its Depakote probe, but Abbott had resisted.

A competing epilepsy drug was the subject of an off-label marketing settlement last year. Johnson & Johnson (JNJ) agreed to pay $81 million and to plead guilty to a criminal misdemeanor to settle allegations that it promoted Topamax for off-label psychiatric uses.

More drug-marketing pacts are on the horizon: J&J recently reserved money for a potential settlement of a probe of its marketing practices for antipsychotic Risperdal. And last year Merck & Co. (MRK) set aside $950 million to cover an anticipated settlement of its marketing and research practices surrounding former painkiller Vioxx.

Abbott shares declined 76 cents to $51.16 in recent trading.

Read more: http://online.wsj.com/article/BT-CO-20110602-707999.html

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