Bayer HealthCare LLC has agreed to pay a substantial settlement in connection with allegations that the drug maker paid mail-order suppliers of products for diabetics to transfer customers from competitors’ products to Bayer products. According to the Department of Justice, Bayer—based in Tarrytown, N.Y.—violated the federal False Claims Act by paying eleven suppliers to switch their customers to Bayer’s glucose monitors, testing strips and other self-testing products for diabetics. The practice allegedly continued from January 1998 to August 2003, when the government started its civil investigation.

Bayer is alleged to have paid a handsome $2.5 million to Liberty Medical Supply Inc. to switch its patients to Bayer products. Liberty—a Florida-based supplier—is one of the nation’s largest direct-to-patient diabetic suppliers. The payments to Liberty were disguised as advertising payments and were based on the number of patients that Liberty managed to convert to Bayer supplies. DOJ alleges that Bayer paid around $375,000 to ten other suppliers as part of the same scheme. The suppliers then went on to file false claims on the sales to obtain Medicare reimbursements, according to the government.

Bayer maintains that it has entered into the gigantic monetary settlement to avoid the hassle of litigation and not because of any wrongdoing. The company will submit to a corporate integrity agreement with the Department of Health and Human Services and will be permitted to continue its participation in federal healthcare programs.

For the full story, go to the Pittsburgh Business Times.