Hot on the heels of the $600 million settlement Allergan reached with the US Department of Justice for off-label marketing charges over Botox, a shareholder has filed a lawsuit claiming the Allergan board should pay for the whopping fine instead of relying on the corporate treasury.

In a shareholder derivative lawsuit filed in Delaware Chancery Court, the Louisiana Municipal Police Employees Retirement System claims that Allergan’s board is responsible because they breached their fiduciary duties by allowing Allergan to violate federal law with off-label marketing practices. Essentially, the pension plan argues Allergan board oversaw a calculated strategy to boost sales illegally and either willfully approved the effort or shirked their responsbilities (here is the lawsuit).

Allergan chairman and ceo David Pyott was also named as a defendant and, since he benefited from increased sales, the suit claims he should be forced to return part of his compensation. In a filing with the US Securities and Exhange Commission, Allergan stated it “is investigating the action and expects to contest it vigorously.”

No doubt, the board has insurance to cover such claims. But the lawsuit should be seen as a wake-up call to other boards presiding over companies that face off-label marketing accusations, especially given that attorneys who represent whistleblowers say an untold number of such lawsuits are currently pending in the court system.

Last week, Allergan agreed to pay $375 million and plead guilty to one misdemeanor count of misbranding in connection with off-label marketing of its Botox med for various unapproved uses - headache, pain, spasticity and juvenile cerebral palsy - between 2000 and 2005. Another $225 million will be paid to in fines to cover civil claims asserted by the DOJ under the False Claims Act - there were three separate whistleblower lawsuits filed by Allergan employees that prompted the government probe (background and documents here).

The drugmaker also entered into a Corporate Integrity Agreement that will be overseen by an outside party and govern its marketing practices for several years. And Allergan agreed to dismiss its First Amendment lawsuit seeking to win the right to distribute info about unapproved uses for Botox in the context of providing scientific and medical info to doctors. Allergan claimed an FDA ban on off-label marketing violates its First Amendment rights to free speech.

Hat tip to HealthLaw 360