Legal Briefing: Allergan Pays $600 Million to Settle Botox Charges

Pharmaceutical company Allergan (AGN) has settled the Department of Justice's criminal and civil charges that it promoted Botox for uses the Food and Drug Administration hadn't approved as safe and effective, agreeing to pay $600 million and enter into a "corporate integrity agreement." Allergan also dropped its related First Amendment lawsuit against the FDA. Note: The Botox in this case is not the cosmetic version.

Although doctors can legally prescribe any approved drug for any purpose, pharmaceutical companies can only market a drug for the purposes it has been approved for as safe and effective. The paradigm for allowing a doctor to prescribe a drug "off-label" is the patient for whom other treatments have failed, and who volunteers to take a medication experimentally in the hopes that his doctor may discover it's a miracle cure.

Botox maker Allergan decided, however, that the FDA's prohibition on off-label marketing infringed on its First Amendment right to free speech, and sued to strike down the regulation. Allergan pointed out that the rules prohibit the truthful communication of accurate information about those uses as well as false communications, and argued the prohibition on truthful communication goes too far.

There's Truth, and Then There Are Half Truths

In evaluating that claim, it's important to put the issue in context. To get a drug approved for a specific use, its manufacturer must go through multiple large (and very expensive) clinical trials, and have its data scrutinized by the FDA. But when promoting drugs to doctors for off-label uses, drug makers may hype very small studies that suggest the drugs might be useful -- studies that may be too small to be statistically sound or to reveal potentially serious side effects. Drug companies may even do a number of these small studies, have their marketing departments write up the clinical results, and then persuade leading doctors in the field to "author" the papers. Although all those communications may be truthful, they certainly aren't truthful in the same way the data derived from statistically sound clinical trials is.

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Pharmaceutical firms have a huge incentive to promote off-label, because most drugs have been proven safe and effective for very limited classes of patients. By pushing a drug for other, more common ailments, a company can turn a niche medication into a blockbuster. Neurontin's journey from an epilepsy drug to a pain pill is one such example. Of course, pharmaceutical firms can always invest in doing the expensive research necessary to prove the safety and effectiveness of their drug for a new use. But generally they don't. Instead, they pour their cash into advertising. Off-label promotion costs everyone, the Department of Justice explained, because insurers, Medicare and Medicaid end up paying for the unapproved and often ineffective treatments, increasing costs to other insurance policy holders and taxpayers.

Paul Clement, the former Bush-administration solicitor general who brought the First Amendment suit for Allergan, said he was disappointed that Allergan dropped the suit, and hopes some other company will file a similar one. If he has his way, and if the FDA loses, we can all expect have more frequent opportunities to be medical guinea pigs, and to pay more for our health insurance for the privilege.