Biogen finalizes $900M deal to settle whistleblower's long-running MS kickback suit

Years into a whistleblower suit that alleged illegal kickbacks to physicians, Biogen is now finally able to end the legal saga just as the troubled drugmaker attends to a corporate restructuring.

Biogen has finalized an agreement to pay $900 million to resolve a lawsuit in which a former employee alleged that the Massachusetts biotech paid kickbacks to doctors over a five-year span starting in 2009 to boost sales of its multiple sclerosis drugs, the Department of Justice said Monday. Biogen in July said it had reached the $900 million deal in principle.

Like many companies have done in response to kickback suits filed under the False Claims Act, Biogen didn’t admit to any wrongdoing. The company “believes its intent and conduct was at all times lawful and appropriate, and Biogen denies all allegations raised in this case,” Biogen said in a Monday statement.

Former Biogen sales manager Michael Bawduniak initiated the litigation. Bawduniak alleged that Biogen held sham events between January 2009 and March 2014 to pay doctors kickbacks under the pretense of remuneration, speaker training fees and consulting fees. The company’s goal was to induce them to prescribe Biogen’s MS drugs Avonex, Tysabri and Tecfidera, the plaintiff said.

The settlement will see Biogen pay about $843.8 million to the U.S. federal government and $56.2 million to 15 states. Bawduniak himself will receive about 29.6% of the federal proceeds, or about $250 million, from the settlement, the DOJ said. 

Biogen’s flagship MS portfolio has been on a fast decline after Tecfidera lost U.S. patent protection in 2020, but it’s still a large business. For the three months ended in June, Tecfidera, Avonex and Tysabri together brought in $1.17 billion in sales for Biogen.

“Biogen determined that now was the right time to resolve the litigation and allow the company to remain focused on our patients and strategic priorities,” the company said in a Monday statement.

The company could certainly use fewer distractions at this moment. Because of the MS revenue decline and its disastrous Alzheimer’s disease launch, Biogen has recently launched a company reshuffling, which aims to save $1 billion in annual costs. CEO Michel Vounatsos is on his way out, and Biogen has yet to name his successor after announcing his departure in May.

For the MS franchise, Biogen has been trying to put patients on Tecfidera follow-on therapy Vumerity, but so far, the newer drug’s growth hasn’t been able to compensate for the loss from its predecessor amid generic competition to Tecfidera.

Elsewhere, while Biogen is still plugging away with a confirmatory trial for Alzheimer’s drug Aduhelm, it has culled the commercial team supporting the drug after a negative Medicare coverage ruling practically denied it any meaningful sales for years to come. Now, industry watchers are focused on Biogen’s next Eisai-partnered Alzheimer’s drug, lecanemab, which has a go-big-or-go-home phase 3 readout expected soon.