AstraZeneca PLC announced that it has reached an agreement “in principle” to pay $520 million settle an investigation by the United States Department of Justice into the company’s marketing of schizophrenia drug Seroquel.
The U.S. Attorney’s Office in Philadelphia has been leading an investigation into AstraZeneca’s marketing of Seroquel, including allegations that the company promoted the drug for uses for which is not approved by the Food and Drug Administration (FDA).
Pharmaceuticals and other drugs are highly regulated by numerous federal and state laws and regulations. Before any drug can be approved for use in the United States, it must first be approved by the Food and Drug Administration (“FDA”). The FDA determines precisely which medical conditions a drug may be used to treat. This determination is known as the drug’s “label” or “indication.” The label or indication is critical to pharmaceutical companies because federal law restricts pharmaceutical companies to marketing or promoting drugs only for the uses or indications approved by the FDA. Physicians, by contrast, generally may prescribe drugs to treat numerous medical conditions even if the drug has not been approved by the FDA to treat those conditions. This practice is known as “off-label” use of a drug because it goes beyond those uses specifically approved by the FDA.
One common scheme by pharmaceutical manufacturers has been to market or promote their drugs to physicians for an off-label or unapproved use. Although physicians may prescribe a drug for an off-label use, pharmaceutical companies violate federal law, including the False Claims Act, when they market, promote or encourage physicians to use their drugs in an off-label or non-FDA approved manner. Pharmaceutical companies that have engaged in illegal off-label marketing or promotion of their drugs have paid the Government hundreds of millions of dollars as a result of Federal False Claims Act cases, often times brought by pharmaceutical sales representatives, sales managers, compliance officers, other pharmaceutical company employees, physicians, nurses and/or employees of hospitals or physician practices.
AstraZeneca said its net profit rose 22% in the third quarter to $2.12 billion from $1.73 billion a year earlier, while revenue increased 5.4% to $8.2 billion from $7.7 billion.
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