ABINGDON, Va. (Legal Newsline) - Virginia Attorney General Ken Cuccinelli announced the approval of a $1.5 billion settlement on Tuesday with Abbott Laboratories to resolve allegations of the unlawful promotion of the prescription drug Depakote.
The court approved the $1.5 billion settlement in United States District Court in Abingdon between Abbott, the United States government, 49 states and the District of Columbia. Abbott admitted civil liability and pled guilty to a criminal charge as well.
The state of Louisiana is pursuing separate litigation in the matter.
Cuccinelli's Medicaid Fraud Control Unit was the lead investigative agency for the case, partnering with the civil attorneys and prosecutors from the U.S. attorney's office. Cuccinelli's MFCU spent more than four years on the matter, traveling to 26 states to conduct interviews and sifting through more than one million records for evidence.
The settlement represents the largest Medicaid fraud recovery in the history of the United States resulting from a state-led inquiry.
Abbott pled guilty on May 7 and agreed to pay $1.5 billion to resolve its civil and criminal liability related to government health programs that were allegedly defrauded when the company received reimbursements for Depakote after engaging in illegal marketing practices. The settlement includes a criminal fine and forfeiture of $700 million and civil settlements with the states and the federal government for $800 million.
The civil settlement includes $291 million for Medicare and other federal programs, $239 million for the states' share of the Medicaid program and $270 million for the federal government's share of the Medicaid program. Abbott will also pay $198.5 million in criminal asset forfeiture penalties, a $500 million fine to the federal government and $1.5 million to Virginia's MFCU for costs. Virginia will receive $4.2 million from the Medicaid civil settlement.
Additionally, Abbott must agree to the terms of a corporate integrity agreement with the Department of Health and Human Services' Office of the Inspector General.
"I've made fighting Medicaid fraud a priority in Virginia by increasing the size of our fraud team by adding 30 new people over the last two years," Cuccinelli said. "I'm committed to ensuring that money intended for medical services for the poor isn't stolen from them and the taxpayers through fraud."
Abbott allegedly misbranded Depakote by promoting the drug to control aggression and agitation in elderly dementia patients and to treat schizophrenia when neither of the uses were approved by the U.S. Food and Drug Administration.
Abbott admitted that between 1998 and 2006, the company maintained a sales force team trained to market the drug in nursing homes for the unapproved uses, despite the absence of credible scientific evidence that the drug was safe for that use.
The company also marketed Depakote between 2001 and 2006 in combination with atypical antipsychotics to treat schizophrenia. The company did this despite failing to demonstrate that the addition of Depakote was any more effective than an atypical antipsychotic would be alone.
Cuccinelli's office first looked into the matter in September 2007 and later contacted the U.S. attorney's office. The first qui tam lawsuit was filed against Abbott Laboratories on October 31, 2007.