Allergan To Plead Guilty, Pay $600 Million To Resolve Allegations Of Off-Label Promotion of Botox

Pharmaceutical manufacturer Allergan Inc. has agreed to plead guilty and pay $600 million to resolve criminal and civil liability arising from the company’s unlawful promotion of its product Botox for uses not approved as safe and effective by the Food and Drug Administration (“FDA”). The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million. 

Botox, a prescription biological product containing botulinum toxin type A, a purified neurotoxin, was FDA approved in 1989 to treat strabismus (crossed eyes) and blepharospasm (involuntary eyelid muscle contraction). In 2000 and 2004, approval was given to treat cervical dystonia (involuntary neck muscle contraction) and primary axillary hyperhidrosis (excessive underarm sweating), respectively. In 2010, approval was given to treat adult upper-limb spasticity.
 
According to the criminal information:  Allergan aggressively promoted Botox as a treatment for headache, pain, spasticity, and juvenile cerebral palsy from 2000 to 2005.
 
The criminal information alleges that:  Allergan exploited its on-label cervical dystonia (“CD”) indication to grow off-label pain and headache (“HA”) sales. In 2003, Allergan developed the “CD/HA Initiative” as a “rescue strategy” in the event of negative results from its headache clinical trials to ensure continued expansion into the pain and headache markets. As part of this initiative, Allergan claimed that cervical dystonia was “underdiagnosed” and that doctors could diagnose cervical dystonia based on headache and pain symptoms, even when the doctor “doesn’t see any cervical dystonia.”
 
The criminal information also alleges that:  Allergan’s off-label marketing tactics included calling on doctors who typically treat patients with off-label conditions. In 2003, Allergan doubled the size of its reimbursement team to assist doctors in obtaining payment for off-label Botox injections. Allergan held workshops to teach doctors and their office staffs how to bill for off-label uses, conducted detailed audits of doctors’ billing records to demonstrate how they could make money by injecting Botox, and operated the Botox Reimbursement Hotline which provided a wide array of free on-demand services to doctors for off-label uses. Allergan also lobbied government healthcare programs to expand coverage for off-label uses, directed physician workshops and dinners focused on off-label uses, paid doctors to attend “advisory boards” promoting off-label uses, and created a purportedly independent online neurotoxin education organization to stimulate increased use of Botox for off-label indications.
 
In a separate civil settlement agreement, Allergan has agreed to pay an additional $225 million to the federal government and the states to resolve claims that its unlawful marketing practices caused false claims to be submitted to government health care programs such as Medicare, Medicaid, TRICARE, and to the Federal Employees Health Benefit Program, the Department of Veterans’ Affairs, and the Department of Labor’s Office of Workers’ Compensation Programs. The civil settlement addresses allegations that from 2001 through at least 2008, Allergan promoted Botox for off-label indications that were not medically accepted and therefore not covered by federal healthcare programs, made unsubstantiated and misleading statements about the efficacy of Botox for off-label indications, instructed doctors to miscode Botox claims for uncovered indications using inappropriate diagnosis codes to ensure payment by government healthcare programs, and provided inducements to doctors to inject more Botox. The federal share of the civil settlement amount is $210,250,000, and Allergan will pay up to $14,750,000 to states that opt to participate in the agreement.
 
The civil settlement resolves three lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The three cases, all pending in the Northern District of Georgia, are United States ex rel. Amy M. Lang & Charles Rushin v. Allergan, Inc., Civ. No. 1:07-1288-WSD; United States ex rel. Cher Beilfuss & Kathleen O’Connor-Masse v. Allergan, Inc., Civ. No. 1:08-1883-WSD; and United States ex rel. Albert E. Hallivis v. Allergan, Inc., Civ. No. 1:09-2817-WSD.
 
Allergan has also executed a Corporate Integrity Agreement ("CIA") with the Department of Health and Human Services, Office of Inspector General ("HHS-OIG"). The five year CIA requires, among other things, that the board of directors (or a committee of the board) annually review the company’s compliance program and certify its effectiveness; that certain senior executives annually certify that their departments or functional areas are compliant, that Allergan send doctors a letter notifying them about the settlement, and that the company post on its website information about payments to doctors, such as honoraria, travel, or lodging. Allergan is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.