Abbott Laboratories (ABT) agreed to pay at least $1.3 billion to settle claims by the U.S. government and 24 states alleging the company illegally marketed its Depakote epilepsy drug, people familiar with the accords said.
Abbott executives, federal prosecutors and state officials have reached a tentative agreement calling for the drugmaker to pay about $800 million to resolve civil claims over Depakote and about $500 million in criminal penalties for marketing the epilepsy medicine for unapproved uses, said three people familiar with the settlement who couldn’t speak publicly because the agreement hasn’t been made public. Abbott said earlier this week it was reserving $1.5 billion to cover costs of the potential settlement.
“Settlement negotiations are ongoing,” Scott Stoffel, a spokesman for Abbott, said in a phone interview today. He declined to comment further. Charles Miller, a U.S. Justice Department spokesman, had no comment on the settlement.
The Abbott Park, Illinois-based company said Oct. 19 that it will split next year, with one company selling medical products and the other prescription medicines. Powered by Humira, an anti-inflammatory with $6.5 billion in annual sales, the new drugmaker may attract a bid from Merck & Co., Roche Holding AG or Bayer AG, said Jeffrey Holford, a Jefferies Group Inc. analyst.
The settlement would be the third-largest illegal pharmaceutical marketing accord in U.S. history behind the $2.3 billion Pfizer paid in 2009 over the marketing of its Bextra painkiller and other drugs and the $1.4 billion Eli Lilly & Co. (LLY) paid the same year over sales of its Zyprexa anti- psychotic medicine.
Abbott declined 4 cents to $54.01 at 9:53 a.m. in New York Stock Exchange composite trading, after rising as much as 60 cents earlier in the day.
The case is U.S. ex rel. McCoyd v. Abbott Laboratories, 1:07-cv-00081, U.S. District Court, Western District of Virginia (Abingdon).
To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at firstname.lastname@example.org; Margaret Cronin Fisk in Southfield, Michigan, at email@example.com.
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org.