Pending Depakote Settlement Sparks Abbott Shareholder Lawsuit

Shareholders of Abbott Laboratories have filed a lawsuit stemming from the drug maker’s pending settlement with the federal government over charges it illegally marketed the anti-seizure medication, Depakote (valproic acid), for off-label uses. The lawsuit, which was filed in Illinois federal court, names Abbott CEO Miles D. White and nine other members of the company’s board of directors as defendants.

In October, Abbott announced that it had reserved $1.5 billion of litigation reserves “related to ongoing settlement discussions” involving the U.S. Department of Justice’s (DOJ) Depakote marketing investigation. According to a Bloomberg News report, the pending Depakote marketing settlement would be the third-largest illegal pharmaceutical marketing accord in U.S. history. People familiar with the pending agreement said that Depakote had agreed to pay $1.3 million to settle Depakote marketing claims brought by the federal government and 24 states.

Depakote is only approved for the prevention of migraines, treating acute manic episodes in bipolar patients and halting seizures in adults and children. In February, the government joined whistleblower lawsuits brought by former Abbott employees alleging the company engaged in off-label marketing starting in the late 1990s, Bloomberg said. According to the allegations, Abbott marketed Depakote as a treatment for agitation and aggression in patients with dementia, autism, sexual compulsion and other disorders. One of the whistleblowers claimed the illegally marketing caused Depakote sales to reach $1.4 billion per year, and that “Compensation for senior executives soared as well.”

While doctors are free to prescribe any approved medication in any way they see fit, it is illegal for pharmaceutical companies to market a drug for uses other than those approved.

The Depakote shareholder derivative lawsuit claims that certain officers and directors of Abbott Laboratories breached their fiduciary duties in connection with the alleged illegal marketing of Depakote and Depakote ER. The defendants “permitted the existence of a corporate culture that encouraged and rewarded financially unlawful and irresponsible activity resulting in the likely loss of $1.3 billion,” the complaint states.

The shareholder claims are far from the only legal woes Abbott faces in regards to Depakote. Personal injury lawsuits continue to be filed against Abbott over allegations that the drug caused birth defects in children. Depakote birth defect lawsuits claim that Abbott minimized its risks, and continued touting the medication to patients and doctors despite its association with birth defects. Some Depakote lawsuits allege Abbott promoted the drug to treat unapproved conditions.

In 2009, the U.S. Food & Drug Administration (FDA) warned that Depakote and similar drugs were associated with an increase risk of neural tube defects. The FDA has placed Depakote and all other valproate products in Pregnancy Category D, which means there is positive evidence of human fetal risk, but potential benefits may still warrant use of the drug in pregnant women.

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