Shire agrees $350 million settlement over kick-back allegations

Shares of Ireland-headquartered Shire (LSE: SHP) were down 3.3% at £45.26 mid-morning following the news that it will pay $350 million to settle US federal and state False Claims Act allegations.

The US Justice Department said that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product Dermagraft, a bioengineered human skin substitute approved by the Food and Drug Administration for the treatment of diabetic foot ulcers.

Shire had already announced in August last year that it would settle for the amount during publication of its second-quarter results, and has made provisions for the charge. In 2014, Shire agreed to sells its Dermagraft assets to US-based regenerative medicine company Organogenesis citing poor prospects for the product. However, it generally retained legacy liabilities relating to the Dermagraft business, including the previously-announced Department of Justice investigation relating to the sales and marketing practices of Advanced Biohealing.