An investor of Allergan, Inc. (NYSE:AGN) has filed a lawsuit alleging breaches of fiduciary duty by members of Allergan 's board in effort to have them shoulder the burden of a $600million settlement with the Department of Justice over off-label uses of its Botox drug.
Allergan, Inc, located in Irvine, California, is a multi-specialty health care company focused on developing and commercializing pharmaceuticals, biologics and medical devices. According to the complaint the plaintiff claims that members of Allergan’s board be held liable and should pay for the recently reached $600 million settlement since the Allergan’s board approved the so-called off-label marketing plans for Botox as part of Allergan’s strategic plans and ignored repeated violations of federal law governing the sales and marketing of drugs. These “off-label marketing practices have already caused injury to the company and will continue to cause harm by virtue of the fines it has agreed to pay in connection with those illegal sales and marketing practices,” so the lawsuit. Last Wednesday, on September 01, 2010, Allergan reached a $600 million settlement in a Georgia federal court to resolve criminal and civil allegations that Allergan actively promoted the wrinkle-smoothing drug Botox, its top-selling product, for unapproved medical uses, including headaches. Botox had been approved by the FDA only for four very rare circumstances. The US Justice Department alleged that Allergan tried to boost Botox sales by encouraging doctors to prescribe the drug for uses the FDA hadn’t authorized, such as treating headaches and pain.

Federal prosecutors alleged that Allergan engaged in tactics to promote the drug for unapproved uses, including paying kickbacks to doctors.Allergan agreed to plead guilty to one misdemeanor charge. In a statement Allergan said it agreed that its marketing from 2000 to 2005 had resulted in the use of Botox for unapproved uses, including the treatment of headache, pain, spasticity and juvenile cerebral palsy.Allergan also settled civil claims linked to three whistleblower lawsuits, but denied liability with regard to the civil claims. As part of the settlement, Allergan reportedly entered into a five-year corporate-integrity agreement with the government that involves additional corporate monitoring by an outside party and other compliance measures.Allergan will pay $375 million related to the charge that it misbranded the drug use and another $225 million to resolve civil charges that it allegedly had caused false claims to be submitted to Medicare, Medicaid and other government health programs. In that regards additional $37.8million will be paid to five whistle-blowers, including former Allergan workers and a doctor, to resolve the whistleblower lawsuits. The plaintiff in the latest lawsuit filed against members of the board of directors wants also that Allergan’s chairman and chief executive officer David Pyott should be forced to return some of that compensation since he directly benefited from the Botox sales through increases to his compensation package.