Drug giant Shire pays US $350m in kickbacks case
Irish headquartered drug giant Shire has agreed to pay $350m (€328m) to the US to settle claims that it enticed physicians with lavish dinners, travel and cash to boost their use of Dermagraft, a bioengineered skin substitute used to treat diabetic foot ulcers.
The deal with Shire and subsidiaries including Dermagraft creator Advanced BioHealing is the biggest recovery by the US under the False Claims Act in a case involving kickbacks for use of medical devices, the US Justice Department said Wednesday in a statement.
The settlement also resolved claims that Shire and Advanced BioHealing illegally marketed the product for uses that weren't approved by the US Food and Drug Administration, and that the companies lied to inflate Dermagraft's price, according to the statement.
"We are pleased to have reached a resolution on this matter, and believe that the terms of the resolution reflect Shire's extraordinary cooperation," Shire spokeswoman Debbi Ford said in an e-mail. The company didn't admit to wrongdoing as part of the deal, she said.
The company was founded in Britain and listed on the London Stock Exchange but moved its headquarters to Dublin in 2008, saying at the time that Ireland was an "optimum" tax location.
Dermagraft was Advanced BioHealing's lead product in 2011 when Shire acquired the Westport, Connecticut-based company for $750m (€703m) to become the focal point of Shire's regenerative medicine unit.
The kickback scheme at Advanced BioHealing was already under way at the time of the deal, having started in January 2007, authorities say.
Shire sold the assets associated with Dermagraft in early 2014, the same year it entered into a so-called corporate integrity agreement with the Department of Health & Human Services and began co-operating with the US government, according to the statement.
The Medicaid program will get $14.5m (€13.6m) from the settlement to resolve claims over improper marketing and false claims, New York Attorney General Eric Schneiderman said. New York was one of 37 states involved in the probe.
According to the Justice Department, Shire submitted hundreds of millions of dollars of bogus claims for Dermagraft to federally funded health-care programs
Dermagraft's salespeople also induced clinics and physicians with entertainment, medical equipment and supplies, and unwarranted payments for speaking engagements, according to the statement.
"Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain," Gregory Demske, chief counsel to HHS's inspector general, said in the statement. (Bloomberg)