UK drugmaker Shire has agreed to pay $350m to the US government to settle charges that it used “kickbacks and other unlawful methods” to persuade clinics to use one of its products.
The Department of Justice contended that Shire and ABH made “hundreds of millions of dollars of false claims” for Dermagraft, a human skin substitute product for diabetic foot ulcers which the company acquired along with Advanced BioHealing in 2011 for $750m, and then divested three years later.
The DoJ accused Shire salespersons of unlawfully inducing clinics and physicians with “lavish dinners, drinks, entertainment and travel,” as well as providing medical equipment and supplies. The DoJ also claims Shire made payments for “purported speaking engagements and bogus case studies”, as well as other financial inducements, to boost Dermagraft sales.
The settlement also resolves allegations that Shire and ABH promoted Dermagraft for off-label uses. It stems from six lawsuits brought against the company under the whistleblower provisions of the US False Claims Act.
“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” commented Principal Deputy Assistant Attorney General Benjamin Mizer, who heads the DoJ’s civil division.
“Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our healthcare system. Patients deserve the unfettered, independent judgment of their health care professionals,” Mizer added.
Dermagraft has proved to be something of an expensive debacle for Shire, which took a $650m charge when it offloaded the product to Organogenesis, a decision prompted by its failure to get approval for leg ulcers.
The UK firm said last year it planned to settle the allegations, but the scale of the payment has only just been finalised. Shire said it has not admitted “wrongdoing of any kind” in deciding to settle.