April 27, 2010 / 6:14 PM / 7 years ago

UPDATE 2-AstraZeneca, US settle anti-psychotic drug case

* Company accused of marketing drug for unapproved uses

* Company denied allegations, agreed to pay $520 mln

* AstraZeneca sales of Seroquel in 2009 were $3.4 bln (Adds DOJ, company comments, sales of drug, legal defense)

WASHINGTON, April 27 (Reuters) - AstraZeneca PLC (AZN.L) has agreed to pay $520 million to settle charges that it illegally marketed and promoted its schizophrenia drug Seroquel for unapproved uses, U.S. authorities said on Tuesday.

The U.S. government accused the company of promoting the drug to patients suffering other ailments such as Alzheimer's disease, anxiety, dementia, depression and post-traumatic stress disorder, even though the Food and Drug Administration had not approved it for those uses.

As a result, false claims to pay for the drug were submitted to U.S. government healthcare programs, the Justice Department and Department of Health and Human Services said. The alleged activity ran from January 2001 through 2006.

Further, the government accused AstraZeneca of violating anti-kickback laws by paying doctors to sign articles that the company wrote about the drug.

Additionally, the government accused the company of paying travel costs for doctors who consulted on marketing related to the unapproved uses of the drug as well as paying doctors to give promotional lectures about the unapproved uses.

"Illegal acts by pharmaceutical companies and false claims against Medicare and Medicaid can put the public health at risk, corrupt medical decisions by health care providers, and take billions of dollars directly out of taxpayers' pockets," Attorney General Eric Holder told reporters.

While the company said in a statement that it denied the allegations, it had agreed to the settlement and took its commitments to the agreement seriously.

"It is in the best interest of AstraZeneca to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines while avoiding the delay, uncertainty, and expense of protracted litigation," said Glenn Engelmann, its U.S. general counsel.

In addition to the $520 million payment, AstraZeneca agreed to a five-year program to ensure compliance with U.S. laws and will have to send a letter to doctors about the settlement.

AstraZeneca has described Seroquel as the number one prescribed atypical anti-psychotic drug in the U.S. market with sales topping $3.4 billion in 2009, up 13 percent from the previous year.

However, it has not come without some cost. In addition to the settlement, AstraZeneca has spent $656 million through 2009 on its legal defense from product liability claims, though some of that has been covered by insurance.

The settlement formalizes an agreement that the British pharmaceutical company had reached in principle in October. It made provisions for the payment last year. (Reporting by Jeremy Pelofsky. Editing by Robert MacMillan and Carol Bishopric)

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