Bayer agreed to pay $40 million to settle allegations its sales team paid kickbacks to hospitals and doctors for prescribing its drugs and that the pharmaceuticals company downplayed risks regarding certain of its offerings.
Bayer’s alleged misconduct concerning the drugs Trasylol, Avelox, and Baycol resulted in hospitals and doctors filing false claims to Medicaid and Medicare and violating the laws of 20 states and the District of Columbia, the Department of Justice said in a press release Friday.
The allegations came to light after former marketing employee Laurie Simpson filed a lawsuit in U.S. District Court for the District of New Jersey in 2005 claiming the sales team paid kickbacks to providers for prescribing Trasylol and Avelox. Bayer’s sales employees also paid kickbacks to hospitals and doctors for them to prescribe the drugs for off-label uses that were not reasonable or necessary, according to the settlement.
Simpson in 2006 filed a second lawsuit, which was later transferred to U.S. District Court for the District of Minnesota, alleging Bayer knew about and downplayed the risks of Baycol. The company misrepresented the effectiveness of Baycol as compared to other drugs on the market and misled the Defense Logistics Agency about the drug so the agency would renew contracts, according to the settlement.
Baycol and Trasylol were eventually withdrawn from the market for safety reasons.
Simpson alleged she was retaliated against while an employee for raising concerns the company was violating its corporate compliance programs.
“Today’s recovery highlights the critical role that whistleblowers play in the effective use of the False Claims Act to combat fraud in federal healthcare programs,” said Brian Boynton, head of the DOJ’s Civil Division, in a statement.
Bayer, which agreed to the settlement without admitting or denying wrongdoing, will pay $38.9 million to the United States and $1.1 million to the 20 impacted states and the District of Columbia. Of the $40 million total, $21 million is restitution.
Simpson will receive $6 million from Bayer under a retaliation claim and a total $11 million federal payout upon receipt of funds, per the qui tam provisions of the False Claims Act.
“The settlement of these cases … reflects a business decision by the company that resolution was preferable to continuing already protracted litigation under a statute that is inefficient and in need of reform,” a Bayer spokesman said in statement.