Abbott Laboratories $1.5 Billion Settlement (2012)
In 2012, Abbott Laboratories agreed to pay $1.5 billion to resolve criminal and civil allegations related to the unlawful promotion of its anti-seizure drug, Depakote. For Barrett Johnston, this case stands as a powerful example of how whistleblowers can hold even the largest pharmaceutical companies accountable for deceptive practices.
Abbott was accused of marketing Depakote for unapproved uses — including dementia and schizophrenia — despite lacking FDA approval for those indications. Such off-label promotion violated the Food, Drug, and Cosmetic Act and the False Claims Act, as it led to false reimbursement claims submitted to Medicare and Medicaid.
The settlement included $800 million in civil damages and $700 million in criminal penalties, with multiple whistleblowers sharing in a substantial award. Abbott also entered into a corporate integrity agreement with the government, requiring compliance reforms and independent monitoring.
The Depakote case reinforced a key truth: when whistleblowers expose fraudulent marketing, they protect patients and taxpayers alike — ensuring that medical decisions are guided by science, not sales tactics.
The government alleged Abbott illegally promoted a drug for unapproved uses and paid kickbacks to boost prescriptions. The company pleaded guilty to misbranding the drug.
– Abbott marketed the drug in nursing homes to control agitation and aggression in elderly dementia patients from 1998 to 2006, a use never approved by the FDA
– Abbott promoted this same drug to treat schizophrenia, even after clinical trials failed to show it was effective for that use
– Abbott also made false statements about the drug’s safety and effectiveness for these unapproved uses
The $1.5 billion total was split between criminal and civil components. The criminal portion totaled $700 million, and the civil settlements with the federal government and states totaled $800 million.
– Criminal penalties: $700 million total, consisting of a $500 million criminal fine and $198.5 million in criminal asset forfeiture
– Civil settlements: $800 million total, resolving False Claims Act allegations and related claims
Multiple whistleblowers were essential to the Abbott settlement. Four former Abbott sales representatives filed four separate qui tam lawsuits in late 2007 in the Western District of Virginia.
Their allegations of off-label marketing and kickbacks formed the foundation of the government’s case.
Under the False Claims Act, these whistleblowers received a combined award of $84 million from the settlement proceeds for their role in exposing the fraud.
Depakote, the brand name for divalproex sodium, was the sole drug at the center of the Abbott Laboratories fraud case. While the FDA had approved Depakote for epilepsy, bipolar disorder, and migraine prevention, Abbott promoted it extensively for unapproved uses.
– The company marketed Depakote to control agitation and aggression in elderly dementia patients, a use never approved by the FDA
– Abbott also promoted the drug for treating schizophrenia, even after clinical trials had failed to demonstrate effectiveness for that condition
– These off-label uses generated substantial revenue for Abbott, as the drug had been on the market since 1983 and was widely prescribed for both approved and unapproved conditions
The Abbott case pushed pharmaceutical compliance beyond the standard Corporate Integrity Agreement.
The company was placed under court-supervised probation for up to five years, an unprecedented step requiring the CEO and Board to personally certify compliance efforts each year. The plea agreement also mandated specific reforms, such as decoupling sales compensation from off-label promotion and ensuring medical education grants were independent of marketing.
By imposing active judicial oversight and personal executive accountability, the case signaled that passive compliance programs were no longer sufficient.
The whistleblowers took concrete steps to document and report the fraud. Their firsthand knowledge of Abbott’s sales tactics provided the government with evidence that would have been nearly impossible to obtain through routine audits.
– Former sales representatives preserved internal documents, including marketing materials, training presentations, and sales data that detailed the off-label promotion schemes for Depakote
– They documented specific instructions from management to target nursing homes and dementia patients, as well as tactics to circumvent FDA restrictions
– They filed qui tam lawsuits in late 2007 and later provided testimony and evidence to DOJ investigators during the multi-year investigation
The Abbott settlement combined the largest criminal fine for off-label marketing with unprecedented court supervision.
The total reached $1.5 billion, with $700 million in criminal penalties and $800 million in civil False Claims Act recoveries. Abbott was placed on five years of corporate probation, requiring its CEO and board to personally certify compliance efforts each year. Four whistleblowers, all former sales representatives, filed separate qui tam suits and shared $84 million for exposing the illegal marketing of Depakote.
The case demonstrated the False Claims Act’s power to hold pharmaceutical companies accountable for systemic fraud.
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