St. Jude Medical Buys Minn.-Based AGA For $1.04 Billion

ST. PAUL, MINN. (AP) -- St. Jude Medical Inc. said Thursday it will pay $16 million as part of a settlement with the U.S. Department of Justice over allegations the medical device maker paid kickbacks to physicians to implant its pacemakers and defibrillators.

According to the Justice Department, the company used three post-market studies and a device registry to pay participating physicians kickbacks of up $2,000 per patient to increase sales of its devices.

The company, which is based in St. Paul, did not admit liability or wrongdoing under the settlement. It maintains that its post-market studies and registries are legitimate clinical studies. The post-market studies asses the clinical performance of a medical device or drug after it has been approved by the Food and Drug Administration.

"Medical device and pharmaceutical companies can use post-market studies legitimately to obtain information about how their products work in the field, but they cannot use those studies, and the honoraria associated with them, to induce physicians to select their products," Carmen Ortiz, U.S. Attorney for the District of Massachusetts, said in a statement.

The company recorded $4.68 billion in revenue in 2009 and analysts estimate that its 2010 revenue topped $5 billion. It said the settlement will not have a material impact on its financial results.

Shares of St. Jude Medical rose 15 cents to close at $42.20.

(© Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)