Allergan Inc., maker of the wrinkle smoother Botox, said it agreed to pay $600 million and plead guilty to a single misdemeanor charge in settling a U.S. investigation of its marketing practices.
Allergan will pay $375 million to the government as part of a “misbranding” charge that the marketing of Botox from 2000 to 2005 led to intended use in treating headache, pain, muscle stiffness and juvenile cerebral palsy, which weren’t approved by the Food and Drug Administration during that time. Allergan will also pay $225 million to resolve civil claims from the Justice Department, the company said today in a statement.
The global settlement concludes a two-and-a-half year investigation that some analysts have said has held up FDA approval for treatment of migraines. Botox, already Allergan’s top product with $1.3 billion in annual sales, may generate an additional $1 billion with expanded use as a migraine remedy, according to Aaron Gal, an analyst at Sanford C. Bernstein & Co. in New York.
“This settlement is in the best interest of our shareholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with government enforcement action in these matters,” Douglas S. Ingram, Allergan’s executive vice president, said in the statement.
The Irvine, California-based company was required as part of the agreement to drop the lawsuit it filed against the FDA in October challenging a government rule that prohibits marketing drugs for unapproved uses. Allergan said it still anticipates the agency will decide on its migraine application this year.
The drugmaker said it expects to report $610 million to $615 million in pretax costs associated with the settlement and certain lawyers’ fees in the third quarter and anticipates other charges in the fourth quarter.
To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.
Wednesday, September 01, 2010
Allergan Will Pay Fine, Plead Guilty to Misdemeanor in Botox Case - Bloomberg
via bloomberg.com
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Out of curiosity, I talked to a friend of mine at Mainor Eglet, a personal injury firm here in Las Vegas, and I asked him where the $600 million in fines goes. Know where? $375 million in criminal fines and forfeiture, $210 million in civil fines to the federal government and $15 million to the states. Translation: Every dollar goes to the government, and they can do with it as they please. If you are personally affected by it, I’d say now is the time to step forward. My contact at Mainor Eglet believes government fines are never enough to deter the behemoth drug companies. And he would know – they are the firm that was all over the news for representing that gentleman who was negligently infected with Hepatitis C and then obtaining a verdict of over $500 million.
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