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Allergan will pay fine, plead guilty to misdemeanour

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Bloomberg Washington
Last Updated : Jan 21 2013 | 4:48 AM IST

Allergan, maker of the wrinkle smoother Botox, agreed to pay $600 million and plead guilty to a single misdemeanour charge in settling a US investigation of its marketing practices.

Allergan will pay $375 million to the government as part of a “misbranding” charge that the marketing of Botox from 2000 to 2005 led to intended use in treating headache, pain, muscle stiffness and juvenile cerebral palsy, which weren’t approved by the Food and Drug Administration during that time. Allergan will also pay $225 million to resolve civil claims from the Justice Department, the company said today in a statement.

The global settlement concludes a two-and-a-half year investigation that some analysts have said has held up FDA approval for treatment of migraines. Botox, already Allergan’s top product with $1.3 billion in annual sales, may generate an additional $1 billion with use in migraines, according to Aaron Gal, an analyst at Sanford C Bernstein & Co in New York.

“The resolution removes an overhang/concern for investors,” Larry Biegelsen, an analyst at Wells Fargo Securities in New York, said in a note to clients today. “The $600 million settlement amount appears reasonable based on industry standards.”

The drugmaker is required as part of the agreement to drop the lawsuit it filed against the FDA in October challenging a government rule that prohibits marketing drugs for unapproved uses. Allergan said it still anticipates the agency will decide on its migraine application this year.

The drugmaker said it expects to report $610 million to $615 million in pre-tax costs associated with the settlement and certain lawyers’ fees in the third quarter and anticipates other charges in the fourth quarter.

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First Published: Sep 02 2010 | 1:32 AM IST

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