AstraZeneca has agreed to pay $26 million to settle litigation involving the atypical antipsychotic, Seroquel. The South Carolina Attorney General had been after the company to reimburse state taxpayers for the off-label use of Seroquel.

The company, along with other drugmakers, had challenged states that hire product liability attorneys on contingency to help the state file lawsuits. AstraZeneca argued that its constitutional due process rights were violated.

AstraZeneca was challenging the South Carolina lawsuits filed with the help of law firms that rely on the contingency fee arrangement. But after years of costly litigation, AstraZeneca decided to stop spending money and pony up the $26 million. The company, you may recall, has already agreed to pay $68.5 million in 36 states and the District of Columbia to resolve the issue over whether or not it illegally marketed Seroquel and failed to disclose its complications. South Carolina was not among them.

While the drug is approved to treat schizophrenia and bipolar disorder, it was marketed to treat the elderly in nursing homes and children. In a nursing home setting the elderly were given Seroquel to treat anxiety and depression, Alzheimer’s disease, and sleep disorders. It makes the elderly easier to control, as a sort of “chemical restraint” when a dementia patient is acting out or aggressive. In toddlers, the drugs are given to control anxiety and behavior problems.

By promoting off-label use, or use for which the drug was not approved, AstraZeneca enhanced Seroquel’s market penetration across a range of patient populations and for a wide range of diagnoses.

Studies have found that prescribing antipsychotics including Seroquel, Risperdal, Zyprexa, and Abilify, appear to increase the risk of heart attack in the elderly.

When the U.S. Food and Drug Administration looked at atypical antipsychotics, it found 83 percent of the drugs were prescribed “off-label” or not for the use they were approved. Even an April article in the Journal of the American Medical Association showing that older patients given antipsychotic agents suffered an increased risk of ischemic stroke has not slowed down the prescribing trend.

What’s shocking is that the prescribing of antipsychotic drugs has doubled in the last ten years to about 9 million prescriptions, making Seroquel the company’s second best-selling product with $5.3 billion in sales in 2010 (Crestor was number one).

In July of last year, AstraZeneca settled nearly all of its defective product claims in the U.S. over Seroquel involving 28,700 cases. As of July 28, all but 250 cases had been settled, reports the New York Times.

AstraZeneca signed a corporate integrity agreement with the federal government, essentially putting it on probation. That probably wasn’t a bad move; discovery in Seroquel litigation revealed a marketing memo from 1997 that said to put a positive spin on a “cursed study.” One official was praised for his “smoke-and-mirrors” job. A company memo also said AstraZeneca had buried unfavorable studies. A manager wondered how the outside world would react when the company was accused of suppressing data.

Apparently, with this settlement, the company decided not to find out.