|January 13, 2017
Contact: Whitney Ray
Phone: (850) 245-0150
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TALLAHASSEE, Fla.—Attorney General Pam Bondi is joining the federal government in a multistate settlement with Shire Pharmaceuticals LLC and other subsidiaries of Shire plc. Shire plc is a multinational pharmaceutical company headquartered in Ireland, with United States operations headquartered in Lexington, Mass. The agreement in principle settles allegations that Shire and the company it acquired in 2011, Advanced BioHealing, employed kickbacks and other unlawful methods to improperly promote a medical device called Dermagraft. Dermagraft is a bioengineered human skin substitute approved by the Food and Drug Administration for the treatment of diabetic foot ulcers.
The agreement resolves allegations that from 2007 to 2014, Dermagraft salespersons unlawfully induced clinics and physicians to use Dermagraft with payment of remuneration. These payments included lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates. According to the federal government, the U.S. settlement with Shire represents the largest False Claims Act recovery by the U.S. in a kickback case involving a medical device.
The federal Anti-Kickback Statute prohibits the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs. Under the False Claims Act, claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent. Additionally, the settlement resolves allegations that Shire and ABH unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of Dermagraft and caused improper coding, verification or certification of Dermagraft claims and related services.
As part of the settlement, Shire will pay the federal government $350 million. More than $14 million of this payment is going to the Medicaid program to resolve allegations that Shire’s improper promotion and marketing of Dermagraft caused false claims to be submitted to government health care programs. The states will receive more than $6 million for their share of the Medicaid program.
The settlement also resolves allegations asserted in six qui tam actions brought by whistleblowers in, or transferred to, the U.S. District Court for the Middle District of Florida. Two of the qui tam actions named various states and included allegations that Shire submitted or caused to be submitted false claims to the Medicaid program under the federal False Claims Act and various state false claims statutes.
A National Association of Medicaid Fraud Control Units Team participated in the investigation and conducted the settlement negotiations with Shire on behalf of the states. The team included representatives of Florida, Illinois, Ohio and New York Medicaid Fraud Control Units. The states coordinated their investigation in conjunction with the Department of Justice’s Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia and Eastern District of Pennsylvania.