Depakote Legal Troubles Not Over for Abbott

Depakote continues to pose more legal challenges for Abbott Laboratories (ABT). Among other issues, the company has allegedly violated consumer protection laws in relation to Depakote’s sale and marketing. After allegations of off-market labeling and U.S. Justice Department investigation last year, Abbott is facing further litigation linked to the anti-seizure medication. The company is now being investigated by a newly formed committee, comprised of various attorneys general from different states, who are looking into the matter. Additionally, eight lawsuits have been filed against Abbott. Both former and current directors and senior executives are encountering shareholder derivative lawsuits, which claim that there was a breach of fiduciary duty.

Depakote (divalproex sodium), has been approved to treat epilepsy, migraines and bipolar mania. Supposedly, Abbott promoted Depakote to treat unapproved conditions such as sexual compulsions, autism and aggression in dementia patients. While physicians have the right to use any FDA-approved drug at their discretion, it is illegal for manufacturers to promote off-label uses.

According to prior whistleblower suits, Abbott has been marketing Depakote for off-label use since the 1990’s. Litigation over Depakote took place between 2007 and 2010, when former and current Abbott employees filed lawsuits. One of these suits was filed by Meredith McCoyd, a former Abbott sale representative whose complaint stated that because of illegal activities, Depakote sales “rocketed to over $1.4 billion per year” and that “Compensation for senior executives soared as well.”, according to Bloomberg Businessweek. In 2010, Chief Executive Miles White was ordered to hand over email correspondence to the U.S. Attorney’s Office, but was unwilling to do so.

In February 2011, the U.S. Justice Department announced that it would join the whistleblower lawsuits. In October, Abbott responded to the suspicions of off-label marketing by setting aside $1.5 billion in the case of a settlement. Currently, a final settlement has yet to be reached. If it does occur, it would be the second largest off-label settlement to date. First place is currently being held by Pfizer, who paid $2.3 billion in a settlement over off-label marketing of the drug Bextra.

News of Abbott’s $1.5 billion earmark had been slightly overshadowed in the midst of an announced company split. At around the same time the money was set aside, Abbott reported that it would split into two separate entities, one focused on medical devices and the other based on pharmaceuticals. The spinoff is expected to be completed by the end of 2012.

Now, additional investigation and lawsuits are beginning to pile up on Abbott’s plate. However, it appears that so far the company is attempting to maintain its innocence. Abbott spokesman Scott Stoffel told Dow Jones Newswires, “We believe the board has acted appropriately at all times” and that “The suits are without merit.” He also stated that “these types of follow-on investigations are not unusual. We are cooperating with the investigation.”