AstraZeneca Faces Government Probe Of Synagis Sales And Marketing
This article was originally published in The Pink Sheet Daily
Executive Summary
The investigation comes one year after the company reached a settlement with the DoJ over its Seroquel marketing and as it faces probe over its relationship with Medco.
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AstraZeneca PLC is once again in the federal government's crosshairs. A year after settling a Department of Justice probe into allegations of off-label promotion of Seroquel (quetiapine), it is under investigation for its sales and marketing of Synagis (palivizumab). The company noted in its second quarter report that its biologics unit MedImmune had received a civil investigative demand from the U.S. Attorney's Office for the Southern District of New York on June 30 and a subpoena duces tecum (for production of documents) from the Office of the Attorney General for the State of New York Medicaid and Fraud Control Unit on July 1. AstraZeneca said government attorneys had advised the company that this was a joint investigation relating to Synagis, which is used to protect high-risk pediatric patients from serious lower respiratory disease caused by respiratory syncytial virus. "The precise parameters of this investigation are unknown, and AstraZeneca is not in a position at this time to predict its scope, duration or outcome, including whether it will result in any liability to AstraZeneca," the company stated. In addition to the Synagis probe, AstraZeneca also is facing an investigation into its relationship with pharmacy benefit manager Medco Health Solutions Inc. by the U.S. Attorney's Office for the District of Delaware's criminal division. The company acknowledged last week that it had received a subpoena requesting documents relating to the gastroesophageal reflex disease drugs Nexium (esomeprazole) and Prilosec (omeprazole) and hypertension medicines Plendil (felodipine) and Toprol XL (metoprolol) (Also see "Medco Health Solutions Faces Second DoJ Probe In Five Years; Latest Involves AstraZeneca" - Pink Sheet, 26 Jul, 2011.). These recent probes indicate that the government is not letting up in its pursuit of fraudulent pharmaceutical marketing behavior and that companies remain vulnerable even after inking major settlements. Seroquel Expenses Top $1.1 Billion In April 2010, AstraZeneca agreed to pay a $520 million civil settlement to resolve Seroquel off-label marketing claims (Also see "AstraZeneca's Seroquel Settlement With DoJ Is Fourth Targeting Antipsychotic Off-Label Promotion; Firm Avoids Criminal Charges" - Pink Sheet, 3 May, 2010.). The DoJ noted at the time that AstraZeneca had brought certain conduct to the attention of the government and then cooperated in the investigation of the allegations. Earlier this year, AstraZenca reached a separate settlement with 37 states and the District of Columbia agreeing to pay $68.5 million to resolve allegations of deceptive Seroquel marketing (Also see "AstraZeneca Hit With New Compliance Mandates In Seroquel Settlement With States" - Pink Sheet, 11 Mar, 2011.). Separately, the government has racked up a hefty sum in Seroquel product liability litigation. In its Q2 report, the company noted that as of July 2011, approximately 28,461 claims have been settled in principle, leaving approximately 250 U.S. claims unsettled. Last August, the company said it had reached agreements to settle approximately 17,600 claims for approximately $198 million (Also see "AstraZeneca Settles Seroquel Suits For A Third Of What Lilly Paid For Zyprexa" - Pink Sheet, 16 Aug, 2010.). Since the third quarter of 2010 AstraZeneca said it has taken provisions of $647 million, which include settlements of product liability claims as of July 2011, future anticipated settlements of the remaining 250 U.S. claims, defense costs from Q4 2010 through the projected end of litigation in the U.S., and the settlement with the states. That tally does not include the $520 million DoJ settlement or defense costs prior to the fourth quarter of last year. AstraZeneca notes that as of June 30, it has incurred legal defense costs of approximately $749 million in connection with Seroquel-related product liability claims. It said it believes that about $134 million of this amount is covered by insurance policies. Thus, including the DoJ settlement and earlier legal defense costs, Seroquel product liability litigation and government investigations have cost AstraZenca more than $1.1 billion. For the first half of 2011 Seroquel had U.S. sales of $2 billion and $858 million in the rest of the world. - Brenda Sandburg ([email protected]) |