Allergan, Inc. Wednesday said it has agreed to pay $600 million in criminal and civil penalties and plead guilty to one misdemeanor count of "misbranding" its drug Botox as part of a global settlement (pdf) with the federal government over off-label uses of the drug.
As part of the plea deal, the Irvine, Calif.-based drug company agreed to drop its First Amendment legal action against the U.S. government. This action, filed last fall, contended that the government's legal position -- that it's a crime for a drug company to communicate truthful information to physicians about off-label uses of its products -- violates the First Amendment and is inconsistent with the Federal Food, Drug & Cosmetic Act.
(Also See: Allergan Press Release (pdf))
At the time the action was filed, critics said it threatened the entire federal regulation of pharmaceuticals.
But one of the top First Amendment experts in the country, Harvard Law School professor Laurence Tribe, said at the time, "I think that Allergan has a strong First Amendment case for a right to market lawful but off-label uses for its drugs in a truthful and non-misleading way." But now the suit is dead.
Tony West, U.S. assistant attorney general in the civil division, said Allergan had also paid kickbacks (pdf) to doctors to try off-label uses. West trumpeted the size of the settlement as "impressive, to be sure."
But Allergan is paying only a fraction of the record $2.3 billion that Pfizer Inc. paid last year to settle misbranding allegations over its pain killer, Bextra. A Pfizer subsidiary also had to plead guilty to a felony in that case.
In Allergan's plea deal, the company admitted that between 2000 through 2005, its marketing of Botox -- not to be confused with its cosmetic cousin -- resulted in intended but off-label uses for the treatment of headache, pain, spasticity and juvenile cerebral palsy.
In March 2010, the Food and Drug Administration approved Botox for the treatment of adults with upper limb spasticity, and the company said clinical trials are under way to gain approval for the other uses.
Over 70 other countries already approve the use of the drug for juvenile cerebral palsy, and doctors in the U.S. can and do legally prescribe it. But it remains illegal for Allergan to discuss that off-label use with the doctors until the FDA approves it.
Of Allergan's penalty, $225 million will go to resolve civil claims asserted by the Department of Justice under the False Claims Act. The company continues to deny liability associated with the civil allegations.
"This settlement is in the best interest of our stockholders 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," said Douglas Ingram, Allergan's executive vice president. Ingram was previously the company's chief legal officer dealing with the government's investigation and supervising the First Amendment suit.
The settlement still must be approved by the federal courts overseeing the criminal and civil cases. Allergan was represented by Paul Clement, a partner at King & Spalding in Washington, D.C., and a former U.S. solicitor general.
The deal also required the company to enter into a corporate integrity agreement with the Department of Health and Human Services. Under the agreement, Allergan will maintain its updated compliance program and undertake a series of compliance-related obligations, including additional monitoring, maintenance of specific written standards, auditing, training, education, reporting and disclosure, for five years.
The agreement also provides for an independent third-party review organization to assess and report on Allergan's compliance program.
Allergan estimated it will record pre-tax charges of between $610 million and $615 million in its third quarter in connection with the settlement. The amount includes interest and attorneys fees.
http://www.law.com/jsp/article.jsp?id=1202471484515
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