AstraZeneca out of $520 Million

Another drug company settling a marketing case. Unfortunately no criminal charges are being pursued. Money comes out of company coffers, business goes on as usual, and shareholders are happy because they are not being prosecuted. AstraZeneca, according to NYT, reported $4.9 billion in Seroquel sales in 2009. Assuming gross margins of 80%, and deducting $30 million for R&D ($600 million amortized over 20 years) gives a "gross profit-r&d" number of $3.89 billion. So $520 million in fine is less than 14% of this number- chump change.

Gives marketing, and ethical marketers, a big black eye.

AstraZeneca to Settle Case for $520 Million - NYTimes.com: "AstraZeneca has completed a deal to pay $520 million to settle federal investigations into marketing practices for its blockbuster schizophrenia drug, Seroquel. The Justice Department plans a news conference on Wednesday to disclose details of the case, according to two people close to the negotiations who were not authorized to discuss it publicly.

AstraZeneca becomes the fourth pharmaceutical giant in the last three years to admit to federal charges of illegal marketing of antipsychotic drugs, a lucrative category of medications that have quickly risen to the top of United States sales charts. Aggressive sales and promotional practices have helped expand the use of powerful new antipsychotic drugs for children and the elderly.

AstraZeneca will sign a corporate integrity agreement with the federal government over its marketing of Seroquel for unapproved uses, but will not face criminal charges, the people close to the negotiations said.

The company, based in London, has been accused of misleading doctors and patients by playing up favorable research and not adequately disclosing studies that show Seroquel increases the risk of diabetes.

AstraZeneca still faces more than 25,000 civil lawsuits filed on behalf of patients contending that the company did not disclose the drug’s risks..."