Texas, States Reach Settlement with Abbott Laboratories

Case resolves company’s Medicaid fraud, wrongful marketing of anti-seizure drug Depakote

AUSTIN – Texas Attorney General Greg Abbott and other state attorneys general today resolved a two-phase Medicaid fraud and deceptive marketing investigation into Abbott Laboratories. The investigation centered on the unlawful promotional scheme that Abbott Laboratories launched to increase the sales of its anti-seizure drug Depakote.

Attorney General Abbott made the following statement about the settlement, which allocates $14 million to the State of Texas for improper Medicaid overpayments, and an additional $5.8 million for violations of the Deceptive Trade Practices Act:

“It is against the law for drug manufacturers to promote their drugs for unapproved uses, but Abbott Labs did just that. In an apparent effort to expand the use of its drug, Abbott Labs overstepped. The agreement reached last week holds the company accountable for violating the law and defrauding the taxpayer-funded Medicaid program.”

In an enforcement action filed along with the consumer fraud settlement, the attorneys general assert that Abbott Laboratories went far beyond urging physicians to prescribe Depakote for seizure disorders such as epilepsy, which is an approved use. The company promoted the “off-label” use of Depakote in treating schizophrenia, agitated dementia and autism, uses not approved by the U.S. Food and Drug Administration. In the separate Medicaid fraud case, the company also unlawfully exploited the state’s Medicaid program in marketing Depakote from 1998 until 2008.

Under the settlement, Abbott Laboratories must not make false claims about Depakote’s benefits or promote it for off-label uses. Regarding future sales of the drugs and financial incentives, the company must ensure that such incentives do not promote off-label uses of the drug.

Under the Texas portion of the civil Medicaid fraud settlement, Texas will receive about $14 million to include payment to the general revenue, relators’ fees and attorneys’ fees. Under the consumer protection portion of the award, $3.9 million will be allocated to general revenue and $1.95 million to State attorneys’ fees.