AG Gansler: Abbott Labs to Pay $1.5 Billion More for Medicaid Fraud

Maryland Medicaid fraud adds $4.8mil to $1.8mil consumer settlement; Illegal marketing of seizure drug Depakote at the core of both settlements

BALTIMORE (May 7, 2012)—Following an earlier announcement of a $100 million consumer protection settlement with Abbott Laboratories, Attorney General Douglas F. Gansler further announced that Maryland - joined by 48 states, the District of Columbia, and the federal government - has reached an additional agreement with Abbott to settle allegations of Medicaid fraud for the company’s illegal marketing of the drug Depakote.

The $1.5 billion settlement is the second largest recovery from a pharmaceutical company in a single civil and criminal global resolution. Of that amount, $10,127,278 is attributable to conduct in Maryland. Maryland Medicaid will recover about $4.8 million after paying part of the settlement to the federal government (which provides half of the funding for the Maryland Medicaid program) and to the whistleblowers in the case.

“This settlement sends the message to companies large and small, that we will fight profiteering that puts Marylanders in harm’s way,” said Attorney General Gansler. “The proceeds of this settlement will be returned to Maryland Medicaid to provide proper medical care for Marylanders who need it.”

Abbott Laboratories will pay the states and the federal government a total of $800 million in civil damages and penalties to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct. In addition to the civil settlement, Abbott Laboratories pled guilty this morning to a violation of the Food, Drug, and Cosmetic Act (FDCA) and agreed to pay a criminal fine and forfeiture of $700 million. Further as a condition of the settlement, Abbott Laboratories will enter into a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General.

Earlier today, Attorney General Gansler announced a $100 million settlement with Abbott Laboratories on behalf of Maryland consumers. That agreement is the largest multi-state consumer protection-based pharmaceutical settlement ever reached. Maryland will receive more than $1.8 million dollars and the company will be prohibited from marketing the drug for uses not approved by the U.S. Food and Drug Administration.

The states contend that from January 1998 through December 31, 2008, Abbott promoted the sale and use of Depakote for uses that were not approved by the Food and Drug Administration as safe and effective. This alleged conduct resulted in false claims to Medicaid and other federal healthcare programs. Further, the states allege that Abbott Laboratories made false and misleading statements about the safety, efficacy, dosing and cost-effectiveness of Depakote for some unapproved uses; improperly marketed the product in nursing homes; and paid illegal remuneration to health care professions and long term care pharmacy providers to induce them to promote and/or prescribe Depakote.

This settlement is based on four qui tam cases that were consolidated and are pending in the United States District Court for the Western District of Virginia in Abingdon, Virginia. The cases were filed under Federal and State false claims statutes, including the Maryland False Health Claims Act.

A state team appointed by the National Association of Medicaid Fraud Control Units participated in the investigation and conducted the settlement negotiations with Abbott on behalf of the participating states. Team members include representatives from the Offices of the Attorneys General for the states of California, Georgia, Illinois, Massachusetts, Maryland, South Carolina, Ohio and Virginia.

Attorney General Gansler would like to thank Assistant Attorney General Shelly Marie Martin, Medicaid Fraud Control Unit chief auditor Ruth Jarrell, and Medicaid Fraud Control Unit investigative auditor Carol Kelly for their work on this case.

Source: Office of Attorney General Gansler

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