Forest Labs (FRX) appears to have initially underestimated how much it needed to pay the feds to go away: In 2009, the company said it had set aside $170 million in case it needed to settle a Department of Justice investigation of the kickbacks it paid in its marketing of Celexa and Lexapro, two antidepressants. Today, the company paid $313 million to wrap up the probes.
Forest's management is used to lavish spending, however, as the whistleblower complaints behind the settlement allege.
The meat of Forest's wrongdoing is that the company promoted Celexa for children even though the FDA had specifically rejected the drug for kids, and even though European data showed it was not useful in youths. The company did something similar with Lexapro -- one pharmaceutical sales rep recommended crushing up Lexapro into apple sauce in order to make it more palatable to children.
Forest overcame resistance to the pediatric use of its antidepressants by bribing doctors with cash and gifts, the lawsuits alleged. Among the goodies Forest handed out were:
- Tickets to St. Louis Cardinals games.
- A $1,000 certificate to Alain Ducasse, one of the best (and most expensive) restaurants in New York, according to this suit.
- A trip to see a George Carlin concert. (They're antidepressants and he's funny, geddit?).
- $1,000 in cash to attend dinner at the Doral Park Country Club in Miami.
- A trip to the Great Escape amusement park in New York.
- Tickets to The Nutcracker at the Paper Mill Playhouse in Millburn, N.J., according to this suit.
This is about the quality of Forest management's decision-making. Given that Forest's marketing plan required making false statements to a Congressional inquiry, it is perhaps not surprising that it also underestimated the size of its legal liabilities.
- Forest Labs Q1: $170 Million Fee for DOJ; Its Numbers Are Written in "Invisible Ink"
- Forest's Lexapro Ghostwriting Budget Was $100K; Emory on the Payroll
- Forest Labs' Lexapro Flap Over JAMA Article Will Likely Be Examined by the Feds
- Suit vs. Forest Labs Names Execs Linked to Alleged Lies About Lexapro, Celexa