The S.C. Attorney General's Office has secured a $26 million settlement against the multi-billion pharmaceutical company AstraZeneca for violating the state Unfair Trade Practices Act by willfully misleading consumers on the potentially serious side effects of the anti-psychotic drug Seroquel.
The settlement order was filed Aug. 22 and is the third award, and final case against anti-psychotic drug manufacturers in South Carolina, that the Attorney General's Office has prosecuted since 2009. The cases began under former Attorney General Henry McMaster, who contracted with the Spartanburg law firm of Harrison, White, Smith and Coggins to prosecute the case on behalf of the state. The Spartanburg firm then contracted with two other firms in Columbia and Houston to assist with the litigation, which continued under Attorney General Alan Wilson.
In the lawsuit order, the company agreed to pay $26 million, which includes $20 million in damages and restitution to the state, $5 million in penalties and $1 million in trial costs. In 2010, AstraZeneca had $5.3 billion in worldwide sales including $3.75 billion in the U.S.
Bryan Stirling, deputy attorney general, said the settlement is fair to the state. A portion of the funds will go into the general fund, some will go to Medicaid and other funds to insurance companies.
Stirling said the Attorney General's Office sued on behalf of the state and the state agencies that paid additional funds because of the medication side effects.
AstraZeneca did not admit any wrongdoing or violation, but agreed to pay the sum to resolve the state action, according to the order signed by Circuit Court Judge Roger Couch.
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"After years of costly litigation, we decided that settling this case was the appropriate way to resolve the matter and allow the company to focus on our core mission of delivering meaningful medicines to patients," according to a statement issued by Tony Jewell, AstraZeneca senior director of corporate communications.
The lawsuit maintains that AstraZeneca violated the state's Unfair Trade Practices Act by willfully misleading consumers of Seroquel, a second generation anti-psychotic drug, on the risk of diabetes, high blood pressure, weight gain and other serious health risks. AstraZeneca was aware of the risks, but failed to include a warning for the potential for weight gain and diabetes in its warning label for many years, the lawsuit states.
After Seroquel was launched, the U.S. Food and Drug Administration sent letters to AstraZeneca in 1998 and 1999 warning of the "false and misleading campaign in its promotion of Seroquel," the lawsuit states.
The FDA noted the following false and misleading statements: claims that Seroquel is effective in mental conditions including bipolar disorder and schizoaffective disorder; AstraZeneca's claims as to how Seroquel works and that the drug was safer and more effective than first generation anti-psychotics.
The FDA also cited the company for failing to disclose risks and important warnings including neuroleptic malignant syndrome, a life-threatening neurological disorder caused by an adverse reaction to neurological or anti-psychotic drugs; tardive dyskinesia, a disorder of involuntary, repetitive muscle movements; orthostatic hypotension, sudden low blood pressure; and seizures in its labeling.
The lawsuit alleges that even after the 1999 letter, the labeling was still misleading and the federal agency again admonished AstraZeneca in 2006 for false and misleading marketing.
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The lawsuit was based on Unfair Trade Practices Act violations that the Seroquel package insert through Jan. 26, 2009 was willfully, deceptively and misrepresented and/or concealed the drug's dangerous side effects.
This case marks the third successful case prosecuted by state Attorney General's Office against manufacturers of second-generation anti-psychotics. The first case against Eli Lilly settled for $45 million and Circuit Court Judge Roger Couch ordered a $327 million in damages last year following a jury verdict against Janssen Pharmaceuticals Inc., a subsidiary of Johnson & Johnson, for the anti-psychotic drug, Risperdal. Janssen has appealed that award.
The Risperdal award is believed to be the largest in the state's history against a company found to have violated the state's Unfair Trade Practices Act.
According to AstraZeneca, another similar case is pending in Mississippi involving Seroquel.
The company has settled similar cases in New Mexico, Utah and Montana this year.