A health care company that illegally misbranded a drug approved to treat seizures, mania and migraines as one that would control aggression in elderly patients and treat schizophrenia will pay $1.5 billion in civil and criminal penalties, federal officials and Virginia Attorney General Kenneth T. Cuccinelli II announced Monday.
The settlement is the second largest payment by a drug company in history, and the largest Medicaid fraud case investigated by a state.
Abbott Laboratories, Inc. has agreed to pay a total of $700 million in criminal fines and forfeiture and $800 million for civil settlements with the states and federal government.
The company illegally promoted the drug Depakote for uses not approved as safe and effective by the Food and Drug Administration.
"This case illustrates how a federal-state partnership can provide real results for the American people," said U.S. Department of Justice Deputy Attorney General James M. Cole at news conference Monday.
In a statement of facts, Abbott admitted that between 1998 and 2006, it kept a special sales force devoted to marketing the drug in nursing homes for controlling aggression in elderly dementia patients — without credible evidence that the drug was safe or effective for that use.
Further, from 2001 to 2006, Abbott marketed the drug in combination with antipsychotic drugs to treat schizophrenia, even after clinical trials failed to show that adding the drug would be any more effective than an antipsychotic alone.
"$1.5 billion is a lot of money," said Timothy Heaphy, U.S. Attorney for the Western District of Virginia. "It will hurt when Abbott writes the check to Treasury. It should hurt."
The case began in September 2007, when Virginia's Medicaid Fraud Control Unit (MFCU) was contacted by a whistleblower alleging that the drug was being misbranded, Mr. Cuccinelli said at a Monday news conference.
After an initial investigation, the unit then contacted the U.S. Attorney's Office for the Western District of Virginia, after which a joint investigation commenced.
Investigators logged 40,000 hours, traveled to 26 states, and sifted through more than a million pieces of evidence, Mr. Cuccinelli said.
Virginia's MFCU will receive $1.5 million from the settlement to recover investigative costs, and its share of the $239 million state Medicaid settlement is $4.2 million.
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