Public School Retirement System of the School District of Kansas City v. White et al. (In re Abbott Laboratories Derivative Litigation)
Updated: June 04, 2012
Status: Ongoing Case
Status: Ongoing Case
Labaton Sucharow is currently pursuing derivative litigation on behalf of Abbott Laboratories (“Abbott” or the “Company”) regarding Abbott’s $1.6 billion settlement with the government to resolve civil and criminal allegations regarding its illegal promotion of the Company’s anti-seizure drug, Depakote. Whistleblower lawsuits filed against the Company between 2007 and 2010, brought by former and current Abbott sales employees, assert that the Company’s off-label marketing of Depakote began in the late 1990s and caused false claims for prescription reimbursement to be submitted to government health programs, including Medicaid. The government intervened in these qui tam actions in early 2011.
Plaintiffs allege that the Company’s board failed to take action to prevent improper marketing practices, which have persisted for more than a decade. This is not the first time Abbott has been investigated or fined by the government for improper marketing practices. In 2001, TAP Pharmaceutical Products, a joint venture of Abbott and Takeda Chemical Industries, pleaded guilty to conspiracy and paid a then-record $875 million fine to settle accusations related to its marketing of the cancer drug, Lupron. In 2003, the Company paid more than $600 million in civil and criminal penalties to end a federal investigation into the Company’s marketing practices and Medicaid and Medicare reimbursements for the cost of liquid food, plastic tubes, and an electronic pump used to get nutrition into the stomachs of patients unable to ingest meals. An Abbott subsidiary, Kos Pharmaceuticals, paid more than $41 million to resolve criminal and civil liability arising from off-label marketing and illegal kickbacks relating to its drugs Advicor and Niaspan in 2010.
Plaintiffs are seeking damages from current and former board members as a result of their breaches of fiduciary duty, as well as corporate governance reforms to prevent similar misconduct from reoccurring.
Plaintiffs allege that the Company’s board failed to take action to prevent improper marketing practices, which have persisted for more than a decade. This is not the first time Abbott has been investigated or fined by the government for improper marketing practices. In 2001, TAP Pharmaceutical Products, a joint venture of Abbott and Takeda Chemical Industries, pleaded guilty to conspiracy and paid a then-record $875 million fine to settle accusations related to its marketing of the cancer drug, Lupron. In 2003, the Company paid more than $600 million in civil and criminal penalties to end a federal investigation into the Company’s marketing practices and Medicaid and Medicare reimbursements for the cost of liquid food, plastic tubes, and an electronic pump used to get nutrition into the stomachs of patients unable to ingest meals. An Abbott subsidiary, Kos Pharmaceuticals, paid more than $41 million to resolve criminal and civil liability arising from off-label marketing and illegal kickbacks relating to its drugs Advicor and Niaspan in 2010.
Consequently, the Company’s settlement (the second largest payment by a drug company to settle an investigation) was likely enhanced due to its failure to comply with terms of previous settlement agreements.
Plaintiffs are seeking damages from current and former board members as a result of their breaches of fiduciary duty, as well as corporate governance reforms to prevent similar misconduct from reoccurring.