Abbott Laboratories has agreed a settlement regarding past sales and marketing practices related to Depakote, representing the second largest healthcare fraud fine in the US.
Abbott will pay $800m to resolve civil allegations, which is to be split between federal and state governments, and $700m to resolve the company's criminal penalty. A further $100m will be paid to states to resolve consumer protection matters.
The charges relate to Abbott forming a specialised sales force which, between 1998 and 2006, marketed the seizure drug Depakote in nursing homes to control agitation and aggression in dementia patients.
Depakote had US Food and Drug Administration approval for the treatment of epileptic seizures, bipolar mania and migraine prevention, but no credible scientific evidence proved its efficacy in treating the symptoms of dementia.
Abbott also marketed the drug in combination with atypical antipsychotics to treat schizophrenia, despite clinical trials failing to demonstrate that the use of Depakote added any further efficacy to the atypical antipsychotic.
As a result, Abbott will plead guilty to one misdemeanour violation of the Food, Drug and Cosmetic Act for misbranding, with the company agreeing to compliance measures and entering a five-year probationary period.
Four former Abbott sales representatives who brought the unlawful actions to the awareness of prosecutors are set to receive $84m from the settlement under US whistleblower regulations.
The charge is only second to Pfizer's payment of $2.3bn in 2009 regarding the illegal promotion of four separate drugs.