Rutledge Reaches Settlement with Shire Pharmaceuticals
June 14, 2017
State to receive over $269,000
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge has reached a settlement with Shire Pharmaceuticals LLC and other subsidiaries of Shire PLC, resolving allegations that Shire and the company it acquired in 2011, Advanced BioHealing, employed kickbacks and other unlawful methods to promote Dermagraft. A bioengineered human skin substitute, Dermagraft is approved by the Food and Drug Administration for the treatment of diabetic foot ulcers.
Shire will pay the federal government $350 million, of which $14.5 million will go to the Medicaid program to resolve allegations that Shire’s improper promotion of the drug caused false claims to be submitted to government health care programs. The states will receive $6,104,000, of which Arkansas will receive $269,018.80.
“The alleged actions of Shire were not only unlawful but ethically wrong,” said Attorney General Rutledge. “Medications should be prescribed to patients because it is in the interest of their health – not because it leads to more lavish dinners, drinks, medical equipment, travel and many other items for the clinics and staff.”
According to the federal government, this is the largest False Claims Act recovery by the U.S. in a kickback case involving a medical device. This settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with dinners, drinks, entertainment and travel, medical equipment and supplies, as well as unwanted payments for purported speaking engagements and bogus case studies, in addition to cash, credits and rebates to induce the use of the drug. The federal Anti-Kickback statute 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.
In addition to kickback allegations, the settlement resolves allegations that Shire and its predecessor unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of the drug and caused improper coding, verification or certification of Dermagraft claims and related services.
A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted the negotiations on behalf of the states. The team included representatives of the Florida, Illinois, New York and Ohio Medicaid Fraud Control Units. The investigation was coordinated in conjunction with the U.S. Department of Justice Commercial Litigation Branch and the U.S. Attorneys’ Offices for the District of Columbia, Middle District of Florida and Eastern District of Pennsylvania.