Abbott’s Resolution of Off-Label Allegations Has Familiar and New Elements to It

By JP Ellison –

Virtually all of the mainstream and trade press outlets have covered the recent Abbott resolution with the U.S. Department of Justice regarding allegations of off-label promotion of Abbott’s drug Depakote.  Undoubtedly, the $1.5B price tag and that coverage have made most readers of this blog familiar with the basic facts of the global resolution which has civil, criminal, and administrative aspects.

Much of Abbott will sound familiar to those who follow off-label investigations, prosecutions, and settlements.  The government alleged — and in connection with a misdemeanor plea to misbranding under the FDC Act, Abbott admitted to — unlawful off-label promotion of its drug (see here and here).  In a civil settlement under the Federal False Claims Act, in which there was no admission of liability, Abbott resolved related claims that it caused false claims to be submitted to government healthcare programs.  As the traditional third leg of this global resolution, Abbott entered into a Corporate Integrity Agreement with the HHS OIG.

Beyond these basic facts, what broader questions or answers are presented by this resolution?  First, it is important to remember that this so-called “(C) plea,” represents an agreement with the government, but not necessarily the final word.  As we know from the Purdue agreement, another high profile case from the Western District of Virginia, the judge (in this case Judge Wilson) may have questions for the parties at the September 21, 2012 sentencing hearing.  As you may recall, in the Purdue case, the judge in that case (Chief Judge Jones) posed a series of written questions to the parties before accepting the plea. 

Second, unlike the Purdue case in which four high level individuals also pled guilty, in the present case, no individual pleas were announced in connection with the Abbott resolution, and the publicly available documents contain standard reservation/limitation language, so there is no indication whether additional charges may be brought.  Given the government’s recent statements regarding prosecuting responsible corporate officers (see here and here), one cannot rule out that possibility, however. 

Third, and in keeping with the issue of enforcement actions against individuals, as was the case with the Purdue case, the resolution of the exclusion issue appears limited to the entities, which raises the question of whether (regardless of any criminal prosecution), high level executives may be the subject of exclusion actions (see our previous post). 

Fourth, the first three questions may be addressed indirectly by the terms of probation imposed in the Abbott plea.  As part of the plea, The CEO of the relevant Abbott entity and the Board of Directors have annual certification obligations.  While it is certainly possible that the government could pursue additional sanctions against individuals in parallel with these obligations, it is also possible that these provisions represent the negotiated resolution of individual accountability in connection with this matter.

Fifth, the terms of the Abbott probation and related requirements for the Abbott “Responsible Entity” to ensure that certain policies and procedures are in place, is a reminder of broad authority of courts—and in connection with negotiated plea agreements — the Department of Justice, to impose terms as conditions of corporate probation.  The Organizational Probation provisions of the Sentencing Guidelines were controversial when first promulgated because they raised questions of whether probation offices could or should have the type of wide-ranging authority contemplated by the Guidelines.  In many resolutions similar to Abbott, forward-looking compliance provisions have largely been contained in corporate integrity agreements with the HHS OIG, not the DOJ plea agreements, although in some respects, the use of corporate monitors, particularly in connection with deferred and non-prosecution agreements, was an attempt to achieve probation-like oversight outside the probation office structure.  If nothing else, the Abbott resolution shows that there is significant flexibility within criminal sentencing framework to address a variety of potential compliance issues.

We will be following this case, both to see how the plea agreement is received by the court as well as to see whether its terms of probation become standard in future settlements.