HHS Describes 2 Recent Settlements
The HHS Office of Inspector General (OIG) says settlements were reached with a drug company and a durable medical equipment company during the six months ending 3/31. In a semi-annual report to Congress covering the period 10/1/16 to 3/31, the OIG says Shire entered into a settlement agreement to resolve allegations in connection with sale of Dermagraft, a human skin substitute product, from 2007 to 2014.
According to the OIG, the company allegedly paid kickbacks to doctors who purchased Dermagraft and then billed Medicare, Medicaid, and other federal healthcare programs. Shire also allegedly paid kickbacks to doctors employed by the Veterans Administration who caused the agency to purchase Dermagraft under a contract with Shire. And, it says, the company marketed the product for unapproved uses and made false statements intended to inflate its price and to conceal, avoid, or decrease an obligation to pay money to the federal government.
In the second case described in the report, Biocompatibles entered into a settlement agreement to resolve allegations that it knowingly caused false claims to be submitted to Medicare and Medicaid. OIG says the company marketed a device known as LC Bead that was cleared by FDA as an embolization device that can be placed in blood vessels to block or reduce certain types of tumors and arteriovenous malformations. But, the report says, LC Bead was never cleared by FDA as a drug-device combination product or for use as a drug delivery device.
OIG says that when the device was combined with prescription drugs for use as a drug-eluting bead, it constituted a new combination drug-device product that was not approved by FDA and not covered by Medicare and Medicaid.
The company agreed to pay $25 million to resolve its False Claims Act liability and paid an additional $8.75 million criminal fine for misbranding the bead and a criminal forfeiture of $2.25 million.