Pharma shelled out $3.75B in fraud penalties in record-setting year, feds say

Once again, the U.S. government has tallied up its health-fraud haul, and once again, its prosecutions set a record. And as usual, the pharma business accounted for the lion's share of the total.

The departments of Justice and Health and Human Services recouped $4.3 billion in criminal and civil penalties in fiscal 2013, a $100 million increase over 2012, the departments said in a statement. That brings the 5-year total to $19.2 billion.

Drugmakers have paid many billions in criminal and civil penalties to the U.S. government over that time frame, most of it in off-label marketing settlements. Pharma's 2013 tab comes to almost $3.75 billion, with Abbott Laboratories' ($ABT) Depakote settlement coming in first at $1.5 billion. Here's a roll call of the top 5:

  • Abbott agreed in May 2012 to pay $1.5 billion, including criminal penalties of $700 million, to settle allegations that it promoted Depakote, a seizure drug also used to treat bipolar disorder, for a variety of off-label uses. Abbott pleaded guilty to misbranding by pushing Depakote to control agitation and aggression in elderly dementia patients, using a specialized sales force tasked with the job.

  • Amgen ($AMGN) paid $762 million to wrap up alleged marketing violations involving several drugs, including its anemia drug Aranesp, its anti-inflammatory drug Enbrel and its platelet therapy Neulasta for off-label uses and for doses not approved by the FDA. The December 2012 settlement also covered kickback allegations. The criminal penalty: $150 million.

  • Ranbaxy Laboratories inked a different sort of DoJ settlement; the India-based drugmaker agreed to pay $500 million for violating manufacturing standards and lying to the FDA. Ranbaxy made and sold meds whose potency, purity or quality were out of bounds, the government says, and misled the FDA in manufacturing reports. Its Ranbaxy USA unit pleaded guilty to 7 felony counts as part of the May 2013 deal.

  • Wyeth Pharmaceuticals, which Pfizer ($PFE) acquired in 2009, pleaded guilty and agreed to pay $490.9 million in civil and criminal penalties for mismarketing the kidney transplant drug Rapamune. The company pushed Rapamune for other types of organ transplants and campaigned to switch patients to Rapamune from other drugs, the government alleges. Wyeth pleaded guilty to a misbranding violation and paid a $233.5 million in fines and forfeitures.

  • Two Sanofi ($SNY) units agreed to pay $109 million to wrap up a Hyalgan kickback probe. The company allegedly gave doctors free units of the knee injection to persuade them to prescribe more of the drug. The settlement also covered sales-price reporting allegations.

Ten other settlements made the HHS report, including deals with Boehringer Ingelheim, Par Pharmaceutical, ISTA Pharmaceutical, and more. Amgen and Wyeth each have another settlement in that group, too.

Fiscal 2013 ended Sept. 30. Already, pharma has a few settlements to add to 2014's list, including a long-awaited deal with Johnson & Johnson ($JNJ) to resolve Risperdal marketing claims. That $2.2 billion settlement so far leads the list. The most recent? Endo Health Solutions' $193 million deal, announced just this week.

- check out the joint press release
- see the HHS inspector general's report

Special Report: Pharma's Top 11 Marketing Settlements