KHN Morning Briefing

Summaries of health policy coverage from major news organizations

AstraZeneca Settles Drug Marketing Lawsuit, Plea Deal Rejected For Possibly Defective Heart Device Maker

The New York Times: AstraZeneca has settled a case and agreed to pay $520 million after federal investigations into its marketing practices for a schizophrenia drug, Seroquel. The announcement came Tuesday from Attorney General Eric Holder. Government officials, including Health and Human Services Secretary Kathleen Sebelius, said the company paid illegal kickbacks to doctors to promote drugs for unapproved uses by children, the elderly, veterans and prisoners, which is illegal under federal law. AstraZeneca denies those allegations. "AstraZeneca becomes the fourth pharmaceutical giant in the last three years to pay to settle federal investigations into illegal marketing of antipsychotic drugs, a lucrative category of medications that have quickly risen to the top of United States sales charts. AstraZeneca agreed to sign a corporate integrity agreement with the federal government over its marketing of Seroquel for unapproved uses, but will not face criminal charges, company and federal officials said. .... Glenn Engelmann, AstraZeneca's U.S. general counsel, released a statement saying the company denies the allegations but settled the investigation with the payment" (Wilson, 4/27).

The Wall Street Journal: "AstraZeneca reported global Seroquel sales of $4.9 billion last year, and drug-data tracker IMS Health ranked it as the fifth best-selling drug in the world." The company still faces thousands of civil lawsuits that allege it failed to warn about the risks associated with the drug. "The Seroquel deal is the latest in a series of costly settlements that drug makers have struck to resolve government probes of off-label marketing, especially regarding blockbuster antipsychotics, which comprise a big portion of Medicaid drug costs" (Loftus, 4/27). 

The New York Times, in a separate story: A federal judge in Minnesota Tuesday rejected a plea deal between federal officials and the Guidant Corporation, which is accused of selling "potentially flawed heart defibrillators. The ruling was a setback for the Justice Department, which had characterized the agreement as a demonstration of its get-tough approach to corporate crime. The deal called on Guidant to plead guilty to two misdemeanors and pay a $296 million fine, described as the largest by a medical device company." The judge said the plea wouldn't hold Guidant sufficiently accountable. "Judge (Donovan) Frank said that prosecutors should have sought probation for Guidant and its parent, Boston Scientific. Probation would have required the companies to take certain steps, like helping to rebuild public confidence in the safety of heart devices, in addition to paying a fine" (Meier, 4/27).

The Associated Press/CBS News: The judge also suggests "Boston Scientific could be ordered to dedicate some resources to charity, or it could be required to set up a compliance and ethics program to address the specific issues in this case. Two doctors who cared for a man who died after his Guidant device malfunctioned were among those who urged the judge to reject the plea" (4/27).

The Wall Street Journal, in a separate story: The U.S. Supreme Court ruled unanimously Tuesday that a lawsuit against Merck & Co. for allegedly misrepresenting the safety of the painkiller Vioxx can go ahead. The ruling said investors didn't wait long to file their lawsuits. "Shareholders, who filed the first of several lawsuits in November 2003, are seeking billions of dollars in damages against the drug maker, saying Merck's alleged deception caused them to pay inflated prices for its stock. The central issue before the Supreme Court focused on when investors should have known that there was a possible Vioxx fraud. Investors must sue within two years of the time they should have suspected a fraud" (Kendall, 4/28). This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.