Elan to settle over past Zonegran marketing activities in USA, with potential $203.5 million fine

Last week, Irish drugmaker Elan Corp said that it has reached an agreement in principle with the US Attorney's Office for the District of Massachusetts with respect to the previously-disclosed US Department of Justice's investigation which started in 2006 of sales and marketing practices for the prescription anti-epileptic drug Zonegran (zonisamide), an that Elan divested to Japan's Eisai in 2004.

If the agreement in principle is finalized, Elan expects to pay $203.5 million as part of a comprehensive settlement for all US federal and related state Medicaid claims. Elan has established a reserve of $206.3 million for this expected settlement and related costs. US shares of Elan slipped 4%, to close at $5.08 on July 15.

As part of this accord, US subsidiary Elan Pharmaceuticals expects to plead guilty to a misdemeanor violation of the US Federal Food, Drug and Cosmetic Act and to enter into a Corporate Integrity Agreement with the Office of Inspector General of the US Department of Health and Human Services. The company has not revealed the nature of the marketing activity involved, nor disclosed the indications for which it was approved, although the original US Food and Drug Administration clearance of the drug in March 2000 was specified as for the adjunct treatment of partial seizures in adults.