Biogen Agrees to Pay $900 Million to Settle Lawsuit Over Kickbacks

The pharmaceutical company Biogen has agreed to pay $900 million to settle federal and state claims that it paid kickbacks to physicians to encourage them to prescribe its drugs, the Justice Department said on Monday as a federal judge approved the deal.

The case began in 2012, when Michael Bawduniak — who was then a Biogen employee — reported to federal law enforcement officials his concerns that the company was making illegal payments. Mr. Bawduniak filed a suit that year under the False Claims Act’s whistle-blower provisions, which let private individuals sue on the government’s behalf.

The government declined to intervene in the lawsuit, which left Mr. Bawduniak and his lawyers to pursue it alone. Brian M. Boynton, head of the Justice Department’s Civil Division, said the settlement “underscores the critical role that whistle-blowers play in complementing the United States’ use of the False Claims Act to combat fraud affecting federal health care programs.”

Mr. Bawduniak will be paid $266 million from the settlement — the largest whistle-blower award on record, Thomas M. Greene, his lawyer, said in an interview. Fifteen states participated in the deal.

“This is a satisfying result,” said Mr. Greene, who estimated that his firm had spent more than 28,000 hours working on the litigation.

In a company statement, Biogen said that it denied all accusations in the case and that it settled so it could “remain focused on our patients and strategic priorities.”

Biogen, in Cambridge, Mass., agreed to settle the case in mid-July, the night before it was scheduled to go on trial in federal court in Boston and the day it reported second-quarter earnings. Mr. Bawduniak claimed in his lawsuit that Biogen bribed doctors with consulting fees and lavish dinners to favor its multiple sclerosis drugs over those of its rivals. The tactics paid off in soaring sales, he said in court filings. The alleged kickbacks defrauded the government-run Medicare and Medicaid programs, according to the lawsuit.

Biogen has been under fire recently over the disastrous launch of its Alzheimer’s drug Aduhelm, which was greenlighted by the Food and Drug Administration despite showing little evidence of benefit for patients. The drug became a commercial failure, and the company’s chief executive stepped down in May.