DOW JONES NEWSWIRES
Abbott Laboratories (ABT) agreed to pay state and federal authorities $1.6 billion to settle allegations it improperly marketed the drug Depakote for off-label uses.
Under the settlement, Abbott will pay $800 million to 46 states, the District of Columbia and the federal government to resolve civil allegations it marketed Depakote, which is approved for seizures, bipolar symptoms and migraines, for other uses not indicated on its label. The drug maker also agreed to pay a $700 million criminal penalty and will distribute an additional $100 million to the states to resolve consumer-protection matters.
Abbott also agreed to refrain from promoting the drug for off-label uses and must take steps to ensure its sales incentives don't encourage doctors to prescribe it for other uses.
The settlement comes after the U.S. Justice Department began 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. State and federal authorities have been stepping up enforcement of alleged off-label promotion in recent years.
Abbott last year set aside a $1.5 billion litigation reserve to pay for the settlement. The drug maker meanwhile is moving forward with a plan to split into two publicly traded companies, separating its medical products and research-based pharmaceuticals operations. The pharmaceutical wing will be responsible for the new compliance and certification requirements after the separation.
The drug maker must also register and disclose clinical trials for five years and must bar sales representatives from disseminating reprints of clinical studies relating to off-label uses of Depakote.
Depakote 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.
Shares were recently up 9 cents at $62.50 Monday. The stock has climbed 19% over the past year.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; email@example.com