Abbott to pay $1.6 billion for Depakote marketing

(Reuters) - Abbott Laboratories Inc ABT.N will pay $1.6 billion to resolve civil and criminal allegations that it promoted anti-seizure drug Depakote for uses that were not approved by U.S. health regulators, the company and federal and state officials said on Monday.

The diversified healthcare company has agreed to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act for misbranding, and to enter into a Corporate Integrity Agreement with the U.S. government that will oversee Abbott’s compliance program for five years.

“This was an intentional, systematic marketing policy by the company, this was not the product of some rogue sales representatives who in some field office on their own went and engaged in off-label marketing,” Timothy Heaphy, U.S. Attorney for western Virginia, told reporters.

The settlement is the second-largest payment by a pharmaceutical company and resolves the Depakote matter with the federal government, as well as 49 states and the District of Columbia, Abbott said.

Pfizer Inc PFE.N in 2010 agreed to pay $2.3 billion in a similar settlement over marketing practices with its drugs.

Under terms of the settlements, Abbott will pay $800 million to resolve state and federal civil charges, a $700 million criminal penalty and $100 million to states to resolve consumer protection matters.

Abbott was accused of promoting the drug for unapproved uses, including to control agitation and aggression in elderly patients who suffered from dementia and to treat schizophrenia, “despite the absence of credible scientific evidence that Depakote was safe and effective for that use,” the U.S. Justice Department said.

Additionally, the civil settlement resolves allegations that Abbott offered money and in some cases paid healthcare professionals and pharmacies to encourage them to promote and prescribe the drug, the Justice Department said.

Abbott said it had previously set aside the funds in anticipation of the settlement, which relates to a four-year-old investigation of Depakote sales and marketing practices dating back to 1998 and running through 2006.

While doctors are free to prescribe drugs any way they see fit, drugmakers are only allowed to promote them for uses approved by the U.S. Food and Drug Administration.

“We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement,” Laura Schumacher, Abbott’s general counsel, said in a statement.

In addition to the large payments, Abbott agreed to several other measures, including a five-year corporate integrity agreement in which the company’s board of directors will have to review and certify the effectiveness of its compliance program.

The company will also be required to post online information about any payments it makes to doctors.

The case emerged in part from whistleblowers who filed lawsuits against Abbott. Those whistleblowers will receive $84 million from the federal government’s share of the settlement, according to the Justice Department.

Abbott plans to split into two companies later this year with the branded drugs business going by the name AbbVie.

Abbott shares were up 30 cents at $62.71 in afternoon trading on the New York Stock Exchange.