Allergan to pay $600 million fine for mislabeling Botox

Allergan, the maker of drug Botox, agreed to pay certain charges to settle the U.S. government's investigation into illegal use of the drug.

The company, which agreed to pay about $600 million in charges, said it "agreed to plead guilty to a single misdemeanor "misbranding" charge covering the period 2000 through 2005."

Botox was used as a drug to treat headache, pain and juvenile spastic palsy, due to the manner in which Allergan marketed the drug between 2000 and 2005.

Several researches have been conducted into the uses of Botox other than for cosmetic purposes. In March 2010, the drug received approval to be used for the treatment of increased muscle stiffness in the elbow, wrist and fingers in adults with upper limb spasticity. However, till 2005, the drug was not approved for such medical use.

The U.S. DoJ said Allergan doubled the size of its reimbursements team to assist doctors in getting payments for off-label Botox injections in 2003. The company held workshops to teach doctors and their staff on how to bill for off-label uses, the regulators said.

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Doctors are allowed to prescribe a drug only for the purpose it has been approved for. However, the company denied the charges related to fraud and reimbursements.

The company will pay the government $375 million and the U.S. Department of Justice (DoJ) $225 million to resolve the civilian claims under the False Claims Act. It will take a related charge of $610 million and $615 million in the third quarter.

Botox, which was first approved about 20 years ago for treatment of several disorders like the eye muscle disorder, is also used for cosmetic purposes to remove wrinkles. The drug is synonymous with cosmetic surgery, and is used by many celebrities to remove frown lines or smoothen skin. Since the drug has been released, there are several other competitors coming out in the market. The most notable one is Dysport, marketed by Medicis Pharmaceuticals.

The release of Dysport raised several concerns in the market regarding the manner in which doctors will prescribe the drug, based on the reimbursement discounts and price rebates offered, rather than the best drug for a medical condition.

The FDA is cracking down on various mislabeled drugs and fraud related to these situations where the drug is being prescribed for diseases other than what they are approved for.

Last year, Pfizer paid about $2.3 billion to settle charges related to its painkiller drug Bextra, which is now withdrawn. The settlement was far larger than Eli Lilly's $1.4 billion settlement related to its antipsychotic drug Zyprexa which was marketed to unapproved segments of children and the elderly.

Zyprexa was one of the best selling drugs used for the treatment of schizophrenia, earning Lilly over $40 billion in sales since it was approved in 1996.