Biogen agrees to $900 million drug kickback settlement on eve of trial

A sign marks a Biogen facility in Cambridge, Massachusetts, U.S. January 26, 2017. REUTERS/Brian Snyder
  • Biotech company agrees to $900 million False Claims Act settlement
  • Whistleblower's lawyer calls the settlement a record

(Reuters) - Biogen Inc on Wednesday said it had cinched a $900 million deal to resolve a whistleblower lawsuit accusing the biotech company of paying doctors kickbacks to prescribe multiple sclerosis drugs just days before a trial was scheduled to kick off.

The agreement-in-principle, which Biogen disclosed in a quarterly earning report, came ahead of a trial set to begin next Tuesday in federal court in Boston in a lawsuit brought by a former employee.

The settlement is subject to the approval of the U.S. Justice Department, which did not intervene in the case as it could have under the False Claims Act but instead left it to the ex-employee Michael Bawduniak to litigate on his own.

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Thomas Greene, his lawyer at Greene LLP, in a statement called the settlement the largest recovery in over 150 years of False Claims Act cases to be secured by a whistleblower without the intervention or participation of the government.

The deal also tops any False Claims Act settlement announced by the Justice Department this year.

Cambridge, Massachusetts-based Biogen, represented by Evan Chesler of Cravath, Swaine & Moore, did not admit wrongdoing.

"We are resolving this matter to avoid the distraction of litigation and to allow the Company to focus on our strategic priorities and the patients we serve," Biogen said.

The lawsuit was filed in 2012 under the False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover taxpayer money paid out based on fraudulent claims.

The Justice Department may intervene in such cases following an investigation, though in 2015 it opted against doing so in Bawduniak's case. Under the law, he is entitled to 25% to 30% of any money Biogen pays.

The lawsuit accused the company of directing millions of dollars in kickbacks in "sham" consulting deals and speaker programs, lavish dinners and entertainment to prescribe its MS drugs Avonex, Tysabri and Tecfidera from 2009 to 2014.

MS medications are expensive and only a small group of products are approved to treat it, Bawduniak said. Paying kickbacks allowed Biogen to compete in a market where just a few thousand doctors are prescribers.

The scheme helped the company boost sales of the drugs even as new competing products were introduced and enable Tecfidera to become a blockbuster drug upon its introduction in 2013, Bawduniak alleged.

The case is United States ex rel Bawduniak v. Biogen Idec Inc, U.S. District Court, District of Massachusetts, No. 12-cv-10601.

For Bawduniak: Thomas Greene of Greene LLP

For Biogen: Evan Chesler of Cravath, Swaine & Moore; and Aaron Katz of Ropes & Gray

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Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.