Shares in Irish drugmaker Shire slid more than 5 per cent Thursday after it agreed to pay $350 million (€330 million) to US authorities to settle claims that it enticed doctors with lavish dinners, travel and cash to boost their use of Dermagraft, a bioengineered skin substitute used to treat diabetic foot ulcers.
The deal with Shire and subsidiaries including Dermagraft creator Advanced BioHealing is the biggest recovery by the US under the False Claims Act in a case involving kickbacks for use of medical devices, the US justice department said Wednesday in a statement.
The settlement also resolved claims that Shire, which is domiciled in Ireland but listed in the UK, and Advanced BioHealing illegally marketed the product for uses that weren’t approved by the US Food and Drug Administration, and that the companies lied to inflate Dermagraft’s price, according to the statement.
“We are pleased to have reached a resolution on this matter, and believe that the terms of the resolution reflect Shire’s extraordinary co-operation with the department of justice throughout its lengthy investigation,” Shire spokeswoman Debbi Ford said in an email.
The company didn’t admit to any wrongdoing as part of the deal, Ms Ford said.
Dermagraft was Advanced BioHealing’s lead product in 2011 when Shire acquired the US company for $750 million to become the focal point of Shire’s regenerative medicine unit.
But Shire sold the assets associated with Dermagraft in early 2014, the same year it entered into a so-called corporate integrity agreement with the department of health and human services and began co-operating with the government in the investigation, according to the statement.
According to the justice department, Shire submitted hundreds of millions of dollars of bogus claims for Dermagraft to federally funded healthcare programmes, helping to erode faith in the healthcare system.
Dermagraft’s salespeople also induced clinics and doctors with entertainment, medical equipment and supplies, unwarranted payments for speaking engagements, according to the statement.
“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” Gregory Demske, chief counsel to HHS’s inspector general, said in the statement.