Allergan, Inc. Under Investor Investigation Over Possible Securities Laws Violations

An investigation on behalf of investors of Aergan, Inc. (NYSE:AGN) over possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Allergan, Inc in connection with its Marketing Charges was announced.

Allergan, Inc, located in Irvine, California, is a multi-specialty health care company focused on developing and commercializing pharmaceuticals, biologics and medical devices. The investigation by a law firm concerns whether Allergan’s directors and officers damaged Allergan by encouraging doctors to prescribe Botox for uses the U.S. Food and Drug Administration had not authorized and whether the directors and officers allegedly allowed Allergan to engage in illegal tactics to promote Botox for these unapproved uses, including paying kickbacks to doctors.

On Wednesday, 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.

The drug didn't have directions for these uses, which means it was misbranded, the company said.

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.

Allergan’s revenue increased over the past four years from $3.0633billion in 2006 to $4.5036billion in 2009. Its Net Income went from a Net Loss of $127.4million in 2006 to a Net Income of $621.30million in 2009. While Allergan reported an increase in revenue and net income its shares traded during 2006 as high as $61.09 per share and traded recently at $63.66 per share. While $66.95 per share marks Allergan’s current 52weekHigh and AGN shares suffered during the financial crisis with a trading as low as $31.57 per share in Nov 2008, Allergan shares traded during 2007 as high as $68.45 per share.