Bayer to pay $40m to resolve claims over alleged kickbacks and false statements

Bayer agreed to pay $40 million to settle claims over its alleged use of kickbacks and false statements related to three prescription drugs, the Department of Justice announced Friday.

The big picture: The lawsuits were brought against Bayer under the whistleblower provisions of the False Claims Act, which allow private citizens to bring suit — on behalf of the government — against entities suspected of defrauding the government.

The details: The Justice Department said Laurie Simpson, a former Bayer employee who worked in its marketing department, filed two lawsuits against the company.

• In one, Simpson alleged Bayer paid kickbacks to hospitals and physicians to induce them to prescribe the drugs Trasylol and Avelox, marketed these drugs for off-label uses that were not "reasonable and necessary" and downplayed the safety risks of Trasylol.
• The lawsuit alleged Bayer's actions caused the submission of false Medicare and Medicaid claims and violated the laws of 20 states and the District of Columbia.
• The second lawsuit filed by Simpson alleged the company knowingly downplayed the drug Baycol’s risks of causing rhabdomyolysis and misrepresented its efficacy compared to other drugs of its kind.
• Bayer subsequently withdrew Trasylol and Baycol from the market for safety reasons.

By the numbers: Bayer will pay $38,860,555 to the federal government and $1,139,445 to 20 states and the D.C., per the DOJ.

• Simpson will receive approximately $11 million from the proceeds of the settlement. 

What they're saying: “As alleged in the complaints, Bayer – one of the largest pharmaceutical companies in the world – engaged in a series of unlawful acts, including paying kickbacks to doctors and hospitals, marketing them off-label, and downplaying their safety risks,” U.S. Attorney for the District of New Jersey Philip R. Sellinger said in a statement Friday.

• "This resolution should send a message to the pharmaceutical industry that such conduct undermines the integrity of federal health care programs and jeopardizes patient safety," he added.

• "This settlement reflects the importance of the whistleblower’s role in litigating False Claims Act actions on behalf of the United States, and we thank Ms. Simpson and her counsel for stepping forward and pursuing this case to conclusion.”

The other side: "The settlement of these cases, which does not include any admission of wrongdoing, 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," Bayer said in a statement.

• "Significantly, the federal government never chose to intervene in these two FCA cases, and now as a result of the settlement, they will be dismissed," it added.

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