By Jonathan Stempel
(Reuters) - Bayer AG (ETR:BAYGN) agreed to pay $40 million to settle claims over its alleged use of kickbacks and false statements related to three prescription drugs, the U.S. Department of Justice said on Friday.
The settlement arose from whistleblower lawsuits filed in 2005 and 2006 in New Jersey by Laurie Simpson, a former Bayer employee who worked in its marketing department and accused the German company of violating the federal False Claims Act.
Bayer did not admit wrongdoing in agreeing to settle.
In a statement, it said the accord "reflects a business decision by the company that resolution was preferable to continuing already protracted litigation."
Bayer was accused of paying kickbacks to doctors and hospitals to induce them to use Avelox, which treats bacteria strains, and Trasylol, which controls bleeding in heart surgeries, and marketed the drugs for off-label uses that were not reasonable or necessary.
It was also accused of downplaying the risks of Trasylol and the statin drug Baycol, both of which were withdrawn from the market for safety reasons, and overstating Baycol's effectiveness.
Bayer's conduct allegedly resulted in submissions of false Medicare and Medicaid claims for Avelox and Trasylol, and fraudulently caused the Department of Defense's combat logistics support agency to renew some contracts related to Baycol.
"Such conduct undermines the integrity of federal health care programs and jeopardizes patient safety," U.S. Attorney Philip Sellinger in New Jersey said in a statement.
The Justice Department said Bayer will pay $38.9 million to the United States, and $1.1 million to 20 U.S. states and Washington, D.C., whose laws were allegedly violated.
Simpson will receive $11.1 million from settlement proceeds. The Baycol lawsuit was moved in 2008 to Minnesota.
The False Claims Act lets whistleblowers sue on behalf of the U.S. government and share in recoveries.