Photographer: Chris Ratcliffe/Bloomberg

Texas Lawsuit Claims This Drugmaker Pushed Antipsychotic to Kids

Updated on
  • Texas sued drugmaker in 2013 over off-label Seroquel marketing
  • State contends AstraZeneca violated previous U.S. settlement

AstraZeneca Plc is in talks to settle a Texas lawsuit claiming that the company fleeced the state’s Medicaid program by fraudulently marketing one of its top drugs, according to court filings.

Texas sued the drugmaker in 2013, saying AstraZeneca had targeted the state’s Medicaid program by urging doctors to prescribe the powerful antipsychotic Seroquel for unauthorized treatments -- particularly for children -- over six years.

While doctors have wide discretion to prescribe drugs beyond what they’ve been approved to treat, drugmakers are forbidden from marketing them for off-label uses. By 2013, AstraZeneca had already agreed to pay almost $600 million in a pair of settlements over claims related to Seroquel’s marketing. 

While the company pledged to prevent off-label marketing as part of those deals, the Texas suit claimed it never did, and seeks $5 billion in civil fines.

Texas says emails and testimony by sales representatives and managers reveal that AstraZeneca had its sales force pitch Seroquel to child psychiatrists and as a treatment for nonbipolar depression even though the U.S. Food and Drug Administration hadn’t approved the drug for either purpose.

“AstraZeneca believes that all applicable laws were followed and that the allegations are without merit,” company spokeswoman Abigail Bozarth said in an email. “Beyond that, we cannot discuss the specifics of ongoing litigation.”

The Cambridge, England-based drugmaker’s shares were down 0.9 percent to 4,967 pence at 2:13 p.m. in London.

AstraZeneca is in negotiations to resolve both the Texas case and a lawsuit in Brooklyn brought by a whistleblower claiming the company downplayed the drug’s risks. Talks on a “potential resolution” aim to settle both suits, according to a Nov. 10 filing in federal court in Brooklyn.

Kayleigh Lovvorn, spokeswoman for Texas Attorney General Ken Paxton, declined to comment on settlement discussions or the lawsuit. 

James Pepper, attorney for Allison Zayas, a whistleblower in the Brooklyn and Texas cases, also declined to comment on settlement prospects. AstraZeneca has “reached a settlement in principle’’ with Zayas, according to a Nov. 14 filing.

First approved in 1997 to treat schizophrenia, Seroquel sales totaled $28 billion between 2007 and 2013, according to data compiled by Bloomberg, and the drug was AstraZeneca’s second-biggest seller from 2007 to 2011. By 2016, sales fell to $737 million amid generic competition.

The company’s zeal in promoting the drug was targeted by the U.S. Justice Department, and in 2010, AstraZeneca signed a $520 million civil pact without admitting wrongdoing but agreeing to market Seroquel “in a manner that complies with all applicable federal health care program and FDA requirements,” including on how doctors are told about off-label uses, through 2015.

But Texas claims that even after securing the settlement AstraZeneca salespeople were still pushing doctors to prescribe Seroquel for unapproved uses. 

According to internal company documents filed in the Texas lawsuit, the state’s sprawling Medicaid program was AstraZeneca’s “number one payer and an ABSOLUTE MUST WIN.” The May 2010 memo reminded the sales team that “it’s not going to sell itself” and pressed them to “do a better job of selling this win.”

Meanwhile, the company was the target of an investigation by 37 states -- including Texas -- over allegedly deceptive marketing practices through 2006. In 2011, AstraZeneca agreed to pay $68.5 million to settle those claims without admitting wrongdoing, and separately paid $647 million to patients who claimed the drugmaker hadn’t disclosed Seroquel’s side effects.

Texas, which brought the 2013 suit with the cooperation of two former AstraZeneca salespeople, says the drugmaker breached the federal settlement by promoting Seroquel to psychiatrists and others who treated children. If found to be true, that could be costly, the state argued in filings, because “repeated or flagrant violation” could lead the U.S. to exclude AstraZeneca drugs from federal programs such as Medicare and Medicaid.

Lauren Ehrsam, a Justice Department spokeswoman, declined to comment.

AstraZeneca has argued that Texas didn’t sustain any harm or damages due to the drug’s marketing, and submitted a statement from former FDA chief counsel Ralph Tyler saying “off-label use of approved medications is expected and, indeed, may constitute the standard of medical care.” 

The company’s lawyer, Steve McConnico, also pointed out that Seroquel -- in its generic form -- remains on the state’s list of drugs approved for Medicaid and prescriptions for it are still being reimbursed by the state. He also said it’s still being prescribed to children and adolescents.

The continued use of Seroquel isn’t relevant to the lawsuit, which alleges violations of the state Medicaid fraud law, Texas officials said in court papers. 

“We will hold AstraZeneca liable for the lies AstraZeneca told, not the ensuing conduct or actions by the providers,’’ Ray Winter, Texas assistant attorney general, said in a May 25 hearing.

Sherry Reagor was an AstraZeneca sales representative in the Dallas area from October 2000 to January 2013 who isn’t a party in the suit. Speaking in an interview last month, she said she was never urged to promote Seroquel for unapproved treatments. 

“None of my managers ever made me do anything like that,” she said. If they had, “I’d tell them I know that’s off-label and against the rules.”

Speaking Fees

To ensure Seroquel was used in Texas mental-health facilities, AstraZeneca paid a total of $465,000 in speaking fees to two psychiatrists who influenced the list of approved drugs for state facilities and encouraged other Texas doctors to use Seroquel, according to the suit.

Sales representatives made more than 16,000 calls to Texas doctors specializing in children’s mental-health issues from January 2007 to Feb. 29, 2012, the lawsuit claims. Doctors at the Clarity Child Guidance Center in San Antonio received more than 750 calls from January 2009 until August 2011, including 263 after the agreement with the U.S. was signed, according to AstraZeneca sales notes produced for the lawsuit.

While AstraZeneca policy barred promoting drugs for off-label uses, sales representatives in Texas said they were given call lists dominated by doctors specializing in treating children. Despite their complaints, the representatives said they risked being fired if the doctors on the lists didn’t prescribe more Seroquel.

“You’ve got stuff coming down from corporate on a regular basis says we can’t promote for child/adolescent, but then they’re on your target list,’’ said former salesman Lance Boyd in a 2016 deposition. “It felt like they were saying you can’t promote to child/adolescent but go get some business, you know?’’

In May 2010, an AstraZeneca district manager sent an email listing key Seroquel prescribers for the company’s Houston region. Under a listing for Beaumont, Texas, about an hour east of Houston, he noted “5 of top 10 are prominent child & adolescent clinics.’’


AstraZeneca paid bonuses tied to Seroquel sales, including those for unapproved uses, Texas said in court filings.

An internal AstraZeneca study said the company could lose more than $113 million in annual sales “if all child and adolescent psychiatrists were removed’’ from call lists, said a 2008 email from a marketing executive to the company’s national sales director. “It is a substantial amount of business to have no promotional efforts,’’ he wrote, according to court filings.

As for use in treating depression, the FDA approved it for bipolar depression in 2008 and the next year for a supplement in patients who weren’t responding to other antidepressants. But salespeople were advised in 2009 to avoid using the word “bipolar” when talking to doctors and to tout Seroquel for all symptoms of depression, according to court filings.

“I was reprimanded multiple times for including bipolar depression,’’ Craig Baker, a former Seroquel sales representative, said in a Jan. 2016 deposition. Baker said his bosses told him that since he’d already talked to doctors about Seroquel’s effectiveness against bipolar depression “you don’t need to include it.’’

At a 2009 regional sales meeting in Dallas, salespeople were trained to refer to the drug as an antidepressant rather than as an antipsychotic, according to court filings by Texas.

“It was something we had been made to understand that we could not do,’’ said Boyd, the salesman, in his deposition. The drug “didn’t have an indication as an antidepressant and at that time it didn’t have an indication for major depressive disorder.’’

The case is the State of Texas v. AstraZeneca LP, No. D-1-GN-13-003530, District Court of the 353rd Judicial District, Travis County (Austin)

— With assistance by Laurel Brubaker Calkins, Jared S Hopkins, and Michelle Cortez

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