Bayer to Settle Suit Over Inflated Claims

Bayer Corp. agreed Tuesday to pay $14 million to the federal government, California and 44 other states to settle allegations it caused doctors and other health-care providers to submit inflated reimbursement claims to the Medicaid health insurance program, the Justice Department said.

The government’s investigation, triggered by a private whistle-blower lawsuit filed under the False Claims Act, found that beginning in the early 1990s, Bayer reported inflated average drug prices, which are used by states to set Medicaid reimbursement rates, the department said.

In the meantime, the company sold three biologic products, Kogenate, Koate-HP and Gamimmune, which are widely used to treat hemophilia and immune deficiencies, at dramatic discounts to induce doctors to buy the products, the government said.

Finally, the government said, Bayer knowingly underpaid rebates that the company owed to state governments to account for discounts it had given to customers under the Medicaid program.

“Bayer did not admit liability with regard to any of these allegations,” said Paul Kalb, a Bayer attorney. “The company is very much of the view that there is no fraud here at all. Nevertheless, it chose to be part of a creative solution to a real social problem, that Medicaid was paying a lot more for drugs than others were paying for the same drugs.”

Kalb said the agreement could be a model for future settlements by more than 20 other pharmaceutical companies named in the same whistle-blower lawsuit.

“Bayer will provide additional pricing information to the states which will allow them to make better decisions on reimbursement levels for Bayer products and for other products,” Kalb said. “There is no automatic reduction in prices. It will be up to the states to act on the new data as they choose.”

Under False Claims Act provisions designed to encourage whistle-blowers, Ven-A-Care of Key West, Fla., which brought the original lawsuit, will receive 20% of the federal government’s share of the settlement.

The company also agreed with the Health and Human Services Department inspector general to institute a corporate integrity program, which will monitor its conduct.

The settlement, which also was signed with a team of state negotiators from Maine, Nevada, New York and Washington representing the National Assn. of Medicaid Fraud Control Units, was filed in U.S. District Court in Miami.

Bayer is headquartered in Leverkusen, Germany.

Kalb said that the state agreements were still being formally signed, but that all the largest Medicaid states were involved, including California, New York, Texas, Michigan and Florida.

Kalb said five smaller states were not involved because the affected Bayer products were not sold in them. But Kalb could not identify those five states.

Justice spokesman Charles Miller also did not have a list of the five states not involved.