Bayer to pay $97.5M to settle kickback probe

— German medical conglomerate Bayer will pay $97.5 million to settle U.S. government allegations that it paid kickbacks to medical suppliers to boost sales of its diabetes products.

The Justice Department said Tuesday that the settlement resolves an investigation into whether Bayer bribed 11 diabetic suppliers into switching patients to its products from competitors' offerings.

Tarrytown, N.Y.-based Bayer Healthcare makes electronic monitors and testing strips used to measure blood sugar levels. Bayer did not admit or deny any wrongdoing in the case, and a spokeswoman said the company is "satisfied that the issues in question have been resolved."

Justice Department officials said Bayer paid Liberty Medical Supply Inc., one of the largest diabetic suppliers, about $2.5 million to convert patients to Bayer supplies between 1998 and 2002. The kickbacks, disguised as payments for advertising, were based on how many patients Liberty successfully converted to Bayer supplies.

Liberty Medical is known for its heavy-rotation television advertising, which features character actor Wilford Brimley. The Port St. Lucie, Fla.-based company did not return calls for comment Tuesday.

The Justice Department also alleged Bayer paid $375,000 in kickbacks to 10 other diabetes equipment companies. A government spokesman said the settlement does not include any penalties against the suppliers.

All 11 companies received government payments for providing equipment to patients enrolled in Medicare, the federal health care plan for seniors. The settlement resolves claims submitted to Medicare by the suppliers for Bayer products from 1998 through 2007.

"If medical device manufacturers want to serve Medicare beneficiaries they must follow the law," said Gregory Katsas, an assistance attorney general with the Justice Department. "Paying health care suppliers to place a particular brand of device with Medicare beneficiaries violates the law and will not be tolerated."

Under the settlement, Bayer agreed to a corporate integrity agreement which requires it to review and update its employee training programs for those who work with Medicare.

"For a period of years now we've already had programs in place to assure compliance," said Bayer spokeswoman Susan Yarin. "So these actions will be in addition to what we're doing already."