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Abbott Shareholders File Lawsuit Over Depakote Marketing

Dec 1, 2011 | Parker Waichman LLP

Depakote maker, Abbott Laboratories, is facing more legal trouble over its marketing of the anti-seizure medication.   Earlier this week, Abbott shareholders filed a lawsuit in Illinois federal court stemming from the drug maker's pending settlement with the federal government over charges it illegally marketed Depakote for off-label uses.

Depakote, also known as valproic acid, has already been named in a number of personal injury lawsuits by plaintiffs who claim its use during pregnancy caused children to be born with birth defects.  Some Depakote lawsuits allege Abbott promoted the drug to treat conditions not approved by the FDA.

Whistleblower lawsuits have also  filed by current and former Abbott employees who claimed the company's alleged illegally marketing of Depakote led to false claims being submitted to Medicaid and other government insurance programs for Depakote reimbursements. Depakote is only approved to for the prevention of migraines, treating acute manic episodes in bipolar patients and halting seizures in adults and children.    The whistleblower lawsuits allege that starting in the 1990s, Abbott marketed Depakote for uses not approved by the U.S. Food & Drug Administration (FDA) including 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.”

In February, the U.S. Justice Department announced it was joining the Depakote whistleblower lawsuits.  Then in October, Abbott announced that it had reserved $1.5 billion of litigation reserves "related to ongoing settlement discussions" with the federal Depakote marketing investigation related to Depakote.  According to a Bloomberg News report, the company has agreed to pay at least $1.3 million to resolve the investigation.  If the settlement is finalized, it would be the third-largest illegal pharmaceutical marketing accord in U.S. history.

The Depakote shareholder derivative lawsuit claims that certain officers and directors at Abbott Laboratories breached their fiduciary duties in connection with 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.

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