U.S. Government Collects $350 Million from Shire Plc Subsidiaries in False Claims Act Kickback Settlement

Lee Bentley, III, United States Attorney in the Middle District of Florida recently announced a $350 million settlement between Shire Pharmaceuticals LLC and the Government. Central to the allegation was the contention that Shire and Advanced BioHealing (ABH) (a company Shire Plc acquired in 2011) , used kickbacks as part of its scheme to induce clinics and physicians to use or overprescribe its product “Dermagraft,” (a bioengineered human skin substitute) for the treatment of diabetic foot ulcers. Shire Plc, a multinational pharmaceutical firm is headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts.

The whistleblowers alleged that Dermagraft salespersons unlawfully induced clinics and physicians with 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, to induce the use of Dermagraft.

The Anti-Kickback Statute, 42 U.S.C.  § 1320a-7b(b), prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging for the purchase of any item for which payment may be made under a federally-funded health care program. The statute not only prohibits outright bribes, but also prohibits offering inducements or remuneration that has as one of its purposes the inducement of a physician to refer patients for services that will be reimbursed by a federal healthcare program. prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA).  Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act.  The False Claims Act provides a vehicle whereby private citizens may bring qui tam actions alleging violations of the Anti-Kickback Statute.

“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system.  Patients deserve the unfettered, independent judgment of their health care professionals.

It may well be that the device industry trails the pharmaceutical industry in the Anti-Kickback arena.  These types of alleged kickbacks were more prevalent in the pharmaceutical industry a few years ago, but, we believe, are less prevalent today and may even have been replaced with more surreptitious substitutes.

The False Claims Act enables courageous whistleblowers to help stop or prevent patient harm by providing the Government with pertinent information.  The whistleblower attorneys at Nolan Auerbach & White will evaluate your potential case in complete confidence.