Botox Makers Agree To Pay $600 Million Penalty For Off-Label Use

by Gopalan on  September 2, 2010 at 12:11 AM Corporate News   - G J E 4
Allergan, the makers of the popular anti-wrinkle treatment Botox, have agreed to pay the US government 600 million dollars in penalty for so-called off-label uses.
 Botox Makers Agree To Pay $600 Million Penalty For Off-Label Use
Botox Makers Agree To Pay $600 Million Penalty For Off-Label Use

The company said in a statement it agreed to plead guilty to a single misdemeanor "misbranding" charge covering the period 2000 through 2005 and pay up 375 million dollars.

It will pay an additional 225 million dollars to resolve civil claims from the Justice Department under the False Claims Act, which relates to fraud.

The misbranding case stems from the promotion of Botox for uses for which it had not been approved between 2000 and 2005, the company said.

During that time, its marketing resulted in uses for headache, pain, spasticity and juvenile cerebral palsy. Some of those uses were subsequently approved or are being considered.

"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 Ingram, Allergan executive vice president.

The drugmaker is also required as part of the agreement to drop the lawsuit it filed against the FDA in October challenging a government rule that prohibits marketing drugs for unapproved uses. Allergan said it still anticipates the agency will decide on its migraine application this year.

Botox contains the deadly botulism toxin. When injected in small doses, the chemical paralyzes a muscle and prevents it from contracting, eliminating facial wrinkles. It has also been found to have other therapeutic uses.

It was first approved in the US 20 years ago for the treatment of eye muscle disorders.

The global settlement concludes a two-and-a-half year investigation that some analysts have said has held up FDA approval for treatment of migraines. Botox, already Allergan's top product with $1.3 billion in annual sales, may generate an additional $1 billion with use in migraines, according to Aaron Gal, an analyst at Sanford C. Bernstein & Co. in New York.

"The resolution removes an overhang/concern for investors," Larry Biegelsen, an analyst at Wells Fargo Securities in New York, said in a note to clients today. "The $600 million settlement amount appears reasonable based on industry standards."

Source: Medindia

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