Healthpoint Limited and DFB Pharmaceuticals have agreed to pay the federal government up to $48 million to settle allegations that they submitted false claims for an unapproved drug ineligible for reimbursement through Medicare and Medicaid. Under the settlement agreement, Healthpoint and DFB will pay $28 million, plus an additional $20 million if in the next three years there is a change in ownership of Healthpoint or DFB.
The medicaid fraud lawsuit claims that Healthpoint launched Xenaderm, a prescription drug for treating bedsores on patients in nursing homes, without ever receiving Food and Drug Administration (FDA) approval. Under the Federal Food Drug and Cosmetic Act, drug manufacturers must first receive FDA approval before they are able to introduce any new drugs to the market and before they can request Medicare and Medicaid reimbursement.
The Department of Justice alleges that Healthpoint intended to market Xenaderm as a new prescription ointment modeled after drugs that were on the market before October 1962. In doing this, Healthpoint was attempting to avoid the time, effort, and expense associated with receiving FDA approval. Furthermore, Healthpoint allegedly misrepresented the regulatory status of Xenaderm in its quarterly reports submitted to the government. In fact, Healthpoint failed to complete a double-blind placebo-controlled clinical study, which never established the effectiveness or safety of Xenaderm.
“This resolution is yet another example of the government’s enduring efforts to ensure that drug manufacturers comply with the critical FDA requirements for the efficacy of their drugs and the integrity of their data,” said U.S. Attorney Carmen M. Ortiz. “This office will continue to vigorously police these key requirements that ensure that the public has access to, and the government pays only for effective medications.”
The Employment Law Group® law firm’s whistleblower attorneys have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.