AstraZeneca to Pay $520 Million to Settle Drug Probe (Update1)

AstraZeneca to Pay $520 Million to Settle Drug Probe (Update1)

By Justin Blum

April 27 (Bloomberg) -- AstraZeneca Plc agreed to pay $520 million to resolve U.S. allegations that it illegally marketed the schizophrenia drug Seroquel for uses that weren’t approved by regulators.

AstraZeneca, the U.K.’s second-largest drugmaker, promoted Seroquel to doctors for unapproved uses including aggression, Alzheimer’s disease and anger management, the Justice Department said today in a statement. The payment is the largest settlement by a company in a strictly civil case involving unapproved marketing claims for drugs.

“What they did endangered patients and drives up health costs,” said Kathleen Sebelius, the secretary of the Health and Human Services Department, at a news conference at the Justice Department in Washington.

With sales of $4.87 billion last year, the drug was the company’s second-biggest seller after the ulcer medicine Nexium. The agreement follows similar settlements by drugmakers including New York-based Pfizer Inc. and Eli Lilly & Co. of Indianapolis.

AstraZeneca’s American depositary receipts, each representing one ordinary share, fell $1.07, or 2.4 percent, to $43.84 at 2:44 p.m. in New York Stock Exchange composite trading.

AstraZeneca’s Denial

AstraZeneca denies the allegations, the company said in a statement. The company entered into a corporate integrity agreement with the U.S. that will last for five years, the statement said.

“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, the company’s U.S. general counsel, in the statement.

The agreement is part of an effort by the Obama administration to crack down on health-care fraud, said Attorney General Eric Holder at the news conference.

AstraZeneca, based in London, paid kickbacks to doctors it recruited to serve as authors of articles about unapproved uses of the drug that were actually written by the company and its agents, according to the Justice Department. The company also paid doctors to travel to resorts to advise on marketing messages for unapproved uses, the department said.

Unapproved Uses

AstraZeneca promoted unapproved uses by influencing the content of company-sponsored medical education programs, according to the Justice Department. The company promoted the drug for use in the elderly and children, said Sebelius.

The Food and Drug Administration clears drugs for safety and effectiveness. Doctors may prescribe medicines for unapproved uses. Companies are barred from marketing them for uses not cleared by regulators.

The government’s investigation was triggered by a whistleblower lawsuit filed in Pennsylvania, according to the Justice Department.

AstraZeneca said in October that it had reached an “agreement in principle” to settle allegations it marketed Seroquel for unapproved uses.

AstraZeneca is facing as many as 26,000 lawsuits over Seroquel, according to court filings. The company in March won the first of the cases to come to court. The suits claim the drug caused diabetes, and many also claim the company promoted Seroquel, approved for schizophrenic and bipolar patients, for uses that hadn’t been approved on the drug’s label.

Seroquel is approved by U.S. regulators for use in treating adults and adolescents with bipolar disorder or schizophrenia and as an add-on therapy for adults taking antidepressants.

GlaxoSmithKline Plc is the U.K.’s largest drugmaker.

To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net

via bloomberg.com

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