Biogen pays $900M to resolve whistleblower's MS kickback suit as competition drags on sales

Just as Biogen’s multiple sclerosis franchise is under serious threat from generics and new competition, the company has decided to pay top dollar to settle a long-running kickback lawsuit centered on the drugs.

Biogen has reached an agreement in principle to pay $900 million to resolve a whistleblower suit dating back to 2015, the company said Wednesday. The suit alleges that the company paid kickbacks to doctors to increase prescriptions of Biogen’s multiple sclerosis drugs Tecfidera, Tysabri and Avonex.

The payment comes close to the $981.1 million in damages the plaintiff was seeking. The suit is also asking for treble damages, which permits a court to triple the amount of the damages, plus civil penalties and certain fees.

Michael Bawduniak, a sales rep at Biogen between 2004 and 2012, originally brought the lawsuit. According to the plaintiff, Biogen held sham consulting meetings and speaking programs as venues to offer kickbacks to physicians.

The suit alleges that even Biogen’s own compliance department constantly raised concerns that there were simply too many meetings and too many consultants involved in marketing the medicines.

But when Bawduniak tried to halt the payment of alleged kickbacks, he was demoted from a director of regional marketing position in 2011 and eventually left the company the next year, he said.

A jury trial was scheduled for this past Monday but was then reset for next week, according to court records. Now, the parties appear to have agreed to resolve the case.

The settlement doesn’t include any admission of liability, and the two sides are still working on finalizing the agreement, Biogen added.

The settlement comes as Biogen’s MS franchise—and the entire company—is struggling.

Facing intense competition from generics and newer therapies, Tecfidera sales slid 18% to $398 million in the second quarter from $488 million the same period last year. Tecfidera did see a quarterly sales uptick in the U.S., but Chief Financial Officer Michael McDonnell noted during a Wednesday call that this was the result of channel dynamics and that Biogen expects the drug's sales to decline throughout 2022.

Growth from Tecfidera follow-on drug Vumerity wasn’t enough to offset the decline. Vumerity sales in the last three months rose $46 million to $137 million. In addition, both Tysabri and Avonex experienced sales declines during the quarter.

Biogen’s MS franchise is under significant pressure from Roche’s antibody drug Ocrevus and Novartis’ newly launched Kesimpta, both of which have enjoyed fast growth.

Meanwhile, all attention at Biogen is currently on the CEO transition and upcoming FDA decision and phase 3 readout for Eisai-partnered Alzheimer’s disease candidate lecanemab, a follow-up to ill-fated Aduhelm.

In the wake of a negative Medicare coverage decision for Aduhelm, Biogen is sending CEO Michel Vounatsos to the exit in a decision unveiled in May. The search for a replacement is “progressing as planned,” but there's no news at this point, Vounatsos said on Wednesday’s call.

Without proper reimbursement, Aduhelm posted meager $100,000 sales in the second quarter. Biogen has previously decided to cease commercialization activities for Aduhelm.

As for lecanemab, Eisai and Biogen recently got an FDA priority review under the accelerated approval pathway with a decision expected Jan. 6, 2023. Before that, the phase 3 Clarity AD trial is expected to report Alzheimer’s outcomes data for lecanemab this fall. After that, Eisai is planning regulatory filings for full approval in the U.S., EU and Japan by the end of first-quarter 2023, Biogen said.