For Immediate Release - October 07, 2015

Pharmaceutical Company Pays $9.25 Million to Resolve Off-Label Marketing Allegations

PharMerica to Pay MassHealth more than $350,000 as Part of Federal-State Settlement

BOSTON – A pharmaceutical company has agreed to pay more than $9.25 million over allegations of illegal off-label marketing that resulted in the promotion of its drugs for uses not approved by the U.S. Food and Drug Administration (FDA), Attorney General Maura Healey announced today.

The multistate and federal settlement with PharMerica Corp. is expected to return more than $350,000 to Massachusetts’ Medicaid program (MassHealth), and settles claims that the company conspired with Abbott Laboratories through kickback arrangements, disguised as rebate agreements, to increase and promote off-label uses of the drug Depakote. 

“Soliciting illegal kickbacks to promote off-label drug use creates improper incentives that undermine the integrity of our healthcare system,” AG Healey said. “Our office is committed to ensuring that companies adhere to industry standards and taxpayer money is spent to improve patient care.”

AG Healey joined with other states and the federal government in a global settlement with PharMerica, a Kentucky based company, to resolve civil allegations that it unlawfully marketed the drugs Depakote DR, Depakote ER and Depakote Sprinkles. These products are approved by the FDA for the treatment of manic episodes associated with bipolar disorder, certain kinds of seizure disorders, and as prophylaxis for patients who suffer from migraine headaches. 

Specifically, the state and federal governments alleged that PharMerica, in exchange for kickbacks, promoted Depakote for a number of uses not approved by the FDA, including for the treatment of patients who have manic-like symptoms, including Behavioral Disturbances in Dementia, even in the absence of a diagnosis of bipolar mania.  Abbott also allegedly trained and directed its sales force to focus on large long-term care pharmacy providers and to offer training to increase the off-label prescribing of Depakote to nursing home patients, including those who do not have psychotic behaviors.

PharMerica allegedly conspired with drug manufacturer Abbott Laboratories through a number of disguised kickback arrangements – totaling millions of dollars – to increase overall utilization of Depakote and to promote misbranded Depakote. 

It is alleged that from January 1, 2001 through December 31, 2008, PharMerica knowingly solicited and received illegal remuneration from drug manufacturer Abbott in the form of rebate agreements that required PharMerica to engage in certain promotional programs, grants, and other financial support, and that this conduct resulted in false claims to Medicaid and other federal healthcare programs.    

Under the terms of the settlement, PharMerica will pay a total of $9.25 million to the state and federal governments, of which more than $5.3 million will go to the Medicaid programs in participating states, including Massachusetts.

The settlement resulted from two qui tam, or whistleblower lawsuits, originally filed in the United States District Court for the Western District of Virginia under the federal False Claims Act and various state false claims statutes.

The joint state-federal investigation of this matter was conducted by a team appointed by the National Association of Medicaid Fraud Control Units, the United States Department of Justice, the United States Attorney’s Office for Western District of Virginia, and the Office of Inspector General for the United States Department of Health and Human Services. Assistant Attorney General George Zachos of the AG’s Medicaid Fraud Division was a member of the national investigative team and handled this matter on behalf of the AG’s Office.