Shire agrees $350m settlement in US ‘kickback’ case
UK-listed group accused of ‘lavish inducements’ for doctors to use skin treatment
Shire, the London-listed pharmaceuticals group, has agreed a $350m settlement over US claims that it used “kickbacks and other unlawful methods” to induce doctors to prescribe one of its drugs.
The US Department of Justice said Shire staff had unlawfully “induced clinics and physicians with lavish dinners, drinks, entertainment and travel” as well as “unwarranted payments” for speaking engagements and cash credits and rebates to boost sales of Dermagraft, a bioengineered human skin substitute.
Shares in the company fell more than 3 per cent after a DoJ announcement that came as president-elect Donald Trump attacked pharmaceutical companies for “getting away with murder” over drug pricing. Mr Trump’s comments caused pharma stocks to tumble — the Nasdaq biotechnology index was down as much as 3.7 per cent while larger drugmakers such as Pfizer fell 2.2 per cent.
Deputy US attorney-general Benjamin Mizer, head of the justice department’s civil division, said the settlement was “the largest False Claims Act recovery” in a kickback case involving a medical product.
“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 healthcare professionals,” Mr Mizer said.
The DoJ said Shire had also “made false statements to inflate the price of Dermagraft”. The allegations were brought in six lawsuits filed by a whistleblower in a process that allows private parties to sue on behalf of the government.
Shire announced in August last year that it would settle the Dermagraft case for the specified amount during publication of its second-quarter results and made a provision for the charge.
It said it had not “admitted wrongdoing of any kind” in the finalised settlement.
The US prohibits payments to induce the use of medical services covered by Medicare, Medicaid and other federal healthcare programmes. The Anti-Bribery statute and the Federal Acquisition Regulations also prohibit bribes to government officials or employees.
In a statement the DoJ alleged that, as a result of these violations, Shire submitted “hundreds of millions of dollars of false claims for Dermagraft”.
Shire suffered a loss in the third quarter as the group missed revenue expectations and absorbed the costs of its $32bn takeover of Baxalta.