The government has made available materials relating to Abbott’s $1.5 billion settlement. (See link below). Here are some quick observations.
Abbott pled guilty to a misdemeanor for “misbranding” its drug Depakote as a result of off-label promotion. Between January 1998 and December 2006, Abbott promoted Depakote to treat behaviors associated with dementia, but FDA had approved the drug only to treat certain types of epileptic seizures and biopolar mania, and to prevent the onset of migraines. (That’s all according to the Plea Agreement and Agreed Statement of Facts filed in court). Abbott has agreed to pay a criminal penalty of $500 million and an additional forfeiture of $198.5 million.
The documents filed in court as part of the plea indicate that the value of the misbranded drugs was $198.5 million (that’s why the forfeiture was for that amount) and that Abbott made a “gross gain” of $400 million as a result of the conduct for which it pled guilty. Under the relevant sentencing statute, Abbott’s criminal penalty could be as much as $800 million (twice the gross gain).
In addition to the criminal resolution, Abbott settled civil False Claims Act allegations asserted in four separate qui tam actions. The FCA allegations were premised on both off-label promotion and violations of the Anti-Kickback Statute. In the civil settlement, Abbott agreed to pay approximately $561 million to the federal government and approximately $239 million to numerous states that entered into a settlement reached with the National Association of Medicaid Fraud Control Units (NAMFCU). The four sets of relators will share $84.1 million from the federal settlement amount, and will presumably also receive additional payments out of the state settlements. The civil settlement covers the period January 1998 through December 31, 2008, a broader time period than the criminal plea.
The civil settlement agreement provides that Abbott must pay interest on the settlement amount dating from September 16, 2011. That implies that the parties agreed to the financial terms of the settlement on that date, and have been negotiating other issues, such as corporate integrity agreement terms or possibly the criminal plea agreement, since then.
Not surprisingly, given the size of the settlement, Abbott has also agreed to enter into a robust Corporate Integrity Agreement. One striking aspect of the CIA is that Abbott will be required to establish a comprehensive Field Force Monitoring Program to oversee promotion, including speaker programs, direct observation of sales representatives, and monitoring and review records of sales representative interactions with physicians and other health care professionals. Abbott will also be required to establish a program to monitor consultant arrangements, research activities, publication activities, and medical education grants. Abbott will also be required to send a letter regarding the settlement and CIA to every physician or other professional that Abbott’s pharmaceutical products group details.
Below is a link to court documents and other material relating to the settlement and plea agreement.