Dive Brief:

• ResMed agreed to pay the federal government $37.5 million to settle allegations it paid kickbacks related to its sleep disorder devices, the Department of Justice said Wednesday. The company will also pay $2 million to certain states related to the allegations, according to a whistleblower's attorney.

• The settlement covers allegations that ResMed provided free and below-cost products and services to induce patient referrals. ResMed settled the case without admitting liability.

• In conjunction with the settlement, ResMed entered into a corporate integrity agreement (CIA) that will subject it to additional monitoring and product pricing controls.

Dive Insight:

Construction of the case against ResMed dates back to 2016 when federal officials subpoenaed documents related to its promotional programs. Over the following years, officials continued to ask ResMed for materials and information, advancing the case to the point that the company agreed to a tentative settlement with the government.

Wednesday’s statement by DOJ shows the government and ResMed have finalized the settlement, with ResMed set to pay $37.5 million.

In disclosing the settlement, DOJ set out its case against ResMed, accusing the company of taking four promotional actions that violated U.S. law, notably the False Claims Act.

ResMed allegedly provided durable medical equipment companies with free services for product resupply, gave sleep labs free or discounted equipment, offered interest-free loans on purchases of its devices and handed out free sleep testing devices to non-specialist physicians. DOJ sees those alleged activities as distorting the marketplace and resulting in claims that violated the Anti-Kickback Statute.

“When companies give free equipment to doctors for the sole purpose of generating business and increasing their bottom lines, federal health insurance programs should not foot the bills. This case rights that alleged wrong by ResMed,” Richard Donoghue, U.S. Attorney for the Eastern District of New York, said in a statement.

DOJ has put provisions in place to stop ResMed from violating U.S. law in the future. Under the terms of the CIA, ResMed will place extra controls on product pricing and sales. ResMed’s arrangements with referral sources will also be subject to internal and external monitoring.

The settlement will allow ResMed to put the case behind it and focus on continuing to grow sales of its devices. In its most recent quarter, the company grew revenue by 16% to $681.1 million, comfortably beating analyst expectations.

This story was updated to reflect an additional settlement amount with states.