Allergan Pleads Guilty, Settles Botox Investigation

Pharmaceutical company agrees to pay $600 million to settle Botox case.

September 01, 2010, 4:18 PM

Sept. 2, 2010— -- Pharmaceutical manufacturer Allergan pled guilty for its off-label promotion of Botox and will pay $600 million to settle additional charges in a longstanding federal investigation.

Botox is best known for its ability to smooth out wrinkles, but it is also approved to treat spasms in the neck, wrist and fingers, eye muscle disorders and excessive arm sweating.

Allergan released a statement Wednesday saying it would plead guilty to one misdemeanor charge of "misbranding" for marketing Botox as a treatment for unapproved uses such as for headache, pain and cerebral palsy in children.

"Allergan also taught doctors how to bill for off-label uses, including coaching doctors on how to miscode Botox claims, leading to millions of dollars of false claims being submitted to federal and state government programs," Department of Justice Assistant Attorney General Tony West told reporters Wednesday.

West also claimed Allergan paid kickbacks to physicians who used Botox off-label.

However, Allergan said in its press release that the "misbranding charge is known as a strict liability offense, and does not involve false or deceptive conduct."

"This settlement is in the best interest of our stockholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with government enforcement action in these matters, and permits us to focus our time and resources on productively developing new treatments for patients and the medical community," said Douglas S. Ingram, Allergan's executive vice president, in its press release.

Under the agreement, Allergan is expected to pay criminal fines totalling $375 million and pay a civil settlement of $225 million.

Botox works by blocking the connections between nerves and muscle, temporarily paralyzing muscles that cause wrinkles as well as certain types of spasms.

Allergan has faced numerous lawsuits over the years for the drug's off-label marketing and use.

Dee Spears of Potter County, Texas, took Allergan to court in January 2010, alleging that Botox injections were responsible for her seven-year-old daughter's 2007 death.

Kristen Spears was six when she began receiving Botox injections to treat the muscle spasms she suffered as a result of cerebral palsy.

The court case addressed Spears' claim that Allergan wrongfully promoted untested, off-label uses of the drug, misrepresented Botox's safety record, and continually failed to adequately warn health care providers of all the known risks of the product, according to court documents.

Pain specialists also have used Botox to relax painful muscle spasms in adults. While standard injections for pain relief numb a muscle for three days, Botox may work for three months without many side effects. However, the FDA has not approved its use for chronic pain.

Botox Hefty Price Tag for Allergan

Allergan's product sales totalled $4.4 billion in 2009, with Botox accounting for more than $1.3 billion, according to the Associated Press.

"With most of the sales of Botox going for off-label use, and with them admitting to off-label promotion, they should have to be paying more than $1 billion, not just $600 million, " said Sidney Wolfe, director of the industry watchdog Public Citizen Health Research Group.

In recent years, federal investigators have reached multibillion dollar settlements with Pfizer, Eli Lilly and other drug companies over their marketing practices, the Associated Press reported.

Allergan's settlement is the fifth largest amount paid by a single defendant in a pharmaceutical off-label marketing case, according to the Justice Department.

Still, Wolfe said, settlements like this are not enough to deter pharmaceutical companies from marketing off-label use of many of its drugs.

"Until some company official goes to jail for this, and until the fines get larger, we're going to see more of this occurring," said Wolfe.

The settlement is not final until approved by a federal judge.

ABC News' Lisa Stark and Brian Hartman contributed to this report.

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