Allergan, Inc. announced that it has reached a resolution with the United States Department of Justice (DOJ) regarding the previously reported Government investigation into Allergan's past US sales and marketing practices relating to certain therapeutic uses of Botox (onabotulinumtoxinA).
Allergan has been cooperating with the Government in a multi-year investigation in Atlanta, Georgia, regarding the use of Botox for certain therapeutic treatments covering a period that commenced in January of 2000. The parties have resolved all issues involved in the investigation by entering into a global settlement, which includes the following:
Allergan has agreed to plead guilty to a single misdemeanor "misbranding" charge covering the period 2000 through 2005 and pay to the Government $375 million. This misbranding charge is known as a strict liability offense, and does not involve false or deceptive conduct. A prescription drug is deemed misbranded when its labelling does not contain adequate directions for its "intended uses," and, under the Government's view, a use that the US Food and Drug Administration (FDA) has not approved (i.e., an "off-label" use) may be deemed "intended" based on written or oral statements made by the manufacturer. As part of its plea, Allergan has agreed that between 2000 through 2005, its marketing of Botox resulted in intended uses for the therapeutic treatment of headache, pain, spasticity and juvenile cerebral palsy. These uses were off-label during the relevant time frame and thus the labelling for Botox did not bear directions for these intended uses, resulting in the product being misbranded. In March 2010, the FDA approved Botox for the treatment of increased muscle stiffness in the elbow, wrist and fingers in adults with upper limb spasticity, the most substantial use during the relevant time period, and thus its label now includes directions for that use. Based on positive Phase III trials announced in September 2008, Allergan has filed for FDA approval of Botox for the treatment of chronic migraine and expects FDA to rule on the application in 2010. Allergan is also in phase III clinical trials investigating the use of Botox to treat neurogenic and idiopathic overactive bladder. Although Botox is approved in 70 countries around the world, including the United Kingdom, Canada, Brazil, Hong Kong, and recently Japan, to treat symptoms associated with juvenile cerebral palsy, it is currently off-label in the United States. Allergan is in discussions with the FDA regarding additional clinical development for juvenile cerebral palsy in the United States.
In addition, Allergan has agreed to pay $225 million to resolve civil claims asserted by DOJ under the civil False Claims Act. The civil settlement is an element of a global settlement that Allergan believes is in the best interest of its stockholders. However, Allergan denies liability associated with these civil allegations and does not believe there is merit to them factually or legally.
To resolve the criminal and civil investigation, Allergan was required by the Government to dismiss Allergan's First Amendment lawsuit pending in Washington, D.C., in which Allergan sought a ruling that it could proactively share truthful scientific and medical information with the medical community to assist physicians in evaluating the risks and benefits if they choose to use Botox off-label to treat certain forms of spasticity. Allergan is disappointed that the court was not afforded an opportunity to hear and rule on these important First Amendment issues, as Allergan believes that physicians, patients, manufacturers, payers, and ultimately the quality of evidence-based medicine itself would have benefited from a ruling clarifying the law.
Allergan is committed to conducting its business consistent with high ethical standards and in compliance with all applicable laws. In an effort to meet its compliance goals, Allergan has a robust and regularly reviewed and updated compliance program. Allergan has further enhanced its compliance program by developing additional comprehensive policies and procedures, supported by significant technology investments, including its state-of-the-art Business Execution Automated Compliance Navigator (BEACON) compliance system.
As part of its global settlement, Allergan has entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the US Department of Health and Human Services. Under the CIA, Allergan will maintain its current compliance program and undertake a series of compliance-related obligations, including additional monitoring, maintenance of specific written standards, auditing, training, education, reporting and disclosure, for five years. The CIA also provides for an independent third-party review organization to assess and report on Allergan's compliance program.
"This settlement is in the best interest of our stockholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with Government enforcement action in these matters, and permits us to focus our time and resources on productively developing new treatments for patients and the medical community," said Douglas S. Ingram, Allergan's executive vice president.
Allergan currently estimates that it will record total non-recurring pre-tax charges of between approximately $610 million and $615 million in its third fiscal quarter in connection with the global settlement with the DOJ. This amount includes estimated interest and certain attorneys' fees that Allergan is obligated to pay in connection with the global settlement, but excludes Allergan's ongoing administrative legal fees and other costs. Allergan is presently determining the tax treatment of the global settlement charges. As such, the tax impact of such charges cannot be reasonably estimated at this time. Allergan currently expects to pay the global settlement costs in its fourth fiscal quarter.
The criminal resolution is subject to approval by the federal court in Northern District of Georgia, and the civil settlement is contingent upon such approval.
Botox is a prescription-only medical product that contains tiny amounts of highly purified botulinum toxin protein refined from the bacterium, Clostridium botulinum. Botox has a unique, protected molecular structure that stabilizes the core toxin in Botox from degradation. When injected at approved and labeled doses into a specific muscle or gland, Botox neurotoxin is expected to diffuse locally and expected to produce a safe and effective result by producing a localized and temporary reduction in the overacting muscle or gland, usually lasting up to approximately 3 to 6.7 months depending on the individual patient and indication.
Botox was first approved by the FDA 20 years ago for the treatment of strabismus and blepharospasm, two eye muscle disorders, making it the first botulinum toxin type A product approved in the world. Since its first approval, Botox has been recognized by regulatory authorities worldwide as an effective treatment for 21 different indications in approximately 80 countries, benefiting patients worldwide. In the United States, Botox is also approved to treat the abnormal head position and neck pain that happens with cervical dystonia (CD) in adults, symptoms of severe underarm sweating (severe primary axillary hyperhidrosis) when medicines used on the skin (topical) do not work well enough, and increased muscle stiffness in elbow, wrist and finger muscles in adults with upper limb spasticity.
In addition to its therapeutic uses, the same formulation of Botox with dosing specific to glabellar lines was approved by the FDA in 2002 under the trade name BOTO Botox etic (onabotulinumtoxinA).
Allergan, Inc. is a multi-specialty health care company established 60 years ago with a commitment to uncover the best of science and develop and deliver innovative and meaningful treatments to help people reach their life's potential.