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Dept of Justice-St. Louis-Based KV Pharmaceutical to Pay $17 Million to Settle False Claims Allegations.Received Reimbursement for Unapproved Drugs

Cat 2011/12/06 22:38:18

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, December 6, 2011
St. Louis-Based KV Pharmaceutical to Pay $17 Million to Settle False Claims Allegations
Received Reimbursement for Unapproved Drugs

WASHINGTON - KV Pharmaceutical Company, which was the St. Louis-based parent company of now-defunct Ethex Corporation, will pay $17 million to resolve False Claims Act allegations that Ethex failed to advise the Centers for Medicare and Medicaid Services (CMS) that two unapproved products did not qualify for coverage under federal health care programs, the Justice Department announced today. Ethex is alleged to have submitted false quarterly reports to the government related to a pair of drugs, Nitroglycerin Extended Release Capsules (Nitroglycerin ER) and Hyoscyamine Sulfate Extended Release Capsules (Hyoscyamine ER).

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Nitroglycerin ER is a single entity coronary vasodilator containing controlled release nitroglycerin that was used for treating angina pectoris (chest pain due to lack of oxygen supply to the heart muscle). Hyoscyamine Sulfate ER is an antispasmodic medication that has been used to treat various stomach, intestinal and urinary tract disorders that involve cramps, colic or other painful muscle contractions. While the active ingredients in Nitroglycerin and Hyoscyamine Sulfate ER had been in products on the market for many years, the Food and Drug Administration (FDA) made determinations in the late 1990s that resulted in the drugs being ineligible for reimbursement by government health care programs such as Medicaid.

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The United States alleges that Ethex misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under federal health care programs. As a result, the government contends, Ethex knowingly caused false claims to be submitted for Nitroglycerin ER and Hyoscyamine Sulfate ER. Ultimately, neither drug ever received full regulatory approval for safety and effectiveness, and neither product is currently on the market.

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“Today’s settlement underscores our commitment to pursuing pharmaceutical companies that allegedly provide false information to obtain taxpayer dollars for unapproved and ineffective drugs,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.

“This False Claims Act agreement shows that the Department of Justice will not allow manufacturers to evade the drug approval process and expect the government to pay for less than effective drugs,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.

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“This settlement sends a strong message to those who seek to put the health of American patients at risk by distributing and promoting drugs which have not been approved by the FDA,” said Ilisa Bernstein, acting director of the Office of Compliance in FDA's Center for Drug Evaluation and Research.

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The settlement resolves allegations against Ethex in a multi-defendant whistleblower actions captioned United States ex rel. Constance Conrad v. Ethex Corp., et al., No. 02-11738-RWZ (D. Mass.). The federal share of the settlement is $10,158,695, and the state Medicaid share of the settlement is $6,841,305. The lawsuits were brought under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private parties with knowledge of fraud to sue on behalf of the United States and share in any recovery. Under the settlement, the whistleblower will receive a total of $1,523,804 from the federal share and additional amounts from the state share.

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The case was investigated by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services (HHS) and the FDA.

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This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of HHS in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.5 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act


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Top Opinion

  • Red Branch 2011/12/06 23:21:35
    Red Branch
    +6
    I am at a bit of a loss here to understand what is going on.

    As I understand it, CMS is a govt entity.
    As I understand it CMS or another govt entity are the ones who would not approve these drugs for reimbursement.

    Now KV Pharmaceutical/Ethex Corp must pay a fine because they did not tell the govt's. left hand what the govt's right hand was doing? Did I get this correctly?

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Opinions

  • Seonag 2011/12/07 13:41:35
    Seonag
    Right hand still doesn't tell the left hand what is going on.
  • 56lady☆POTL JLA BTO-t- BCRA... 2011/12/07 05:07:34
    56lady☆POTL JLA BTO-t- BCRA-F's
    +1
    I am like Red Branch I am confused . . . maybe I will read it again on Wednesday and it will make more sense!!!
  • Temlakos~POTL~PWCM~JLA~☆ 2011/12/07 00:21:30
    Temlakos~POTL~PWCM~JLA~☆
    +3
    This is the same Justice Department that "threw down" a bunch of weapons on the Mexico side of the border and then *lied* about it.
  • Rodney 2011/12/06 23:32:27
    Rodney
    +5
    Have I misinterpreted this? "The United States alleges that Ethex misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under federal health care programs. " As I read it, the CMS relied upon the company to tell THEM the drugs didn't qualify when it was the CMS that made the determination that those two drugs didn't qualify. Am I missing something here?
  • Red Branch 2011/12/06 23:21:35
    Red Branch
    +6
    I am at a bit of a loss here to understand what is going on.

    As I understand it, CMS is a govt entity.
    As I understand it CMS or another govt entity are the ones who would not approve these drugs for reimbursement.

    Now KV Pharmaceutical/Ethex Corp must pay a fine because they did not tell the govt's. left hand what the govt's right hand was doing? Did I get this correctly?
  • Rodney Red Branch 2011/12/06 23:34:05
    Rodney
    +4
    That's my take on it too? I'm confused. Guess it is up to the companies to tell the federal government what they are doing. I have to wonder if Ethex even knew?
  • Red Branch Rodney 2011/12/06 23:43:58
    Red Branch
    +3
    They may not have either. Since it is the reimbursing agency to notify those submitting the claims for reimbursement to the procedures. So if CMS didn't know about the rules, they couldn't have told Ethex.

    Now, the only way Ethex could have known about the rules was to have someone studying the Federal Register and notifying the company as the new regs role out. This is not their job.
  • Rodney Red Branch 2011/12/06 23:52:00
    Rodney
    +4
    I can understand that. My lil sis and her husband are farmers and it is THEIR responsibility to stay on top of the constant updates to EPA and other agency regulations. Last I talked to them, they spend one day a week searching for updates that they are never notified of but are expected to know of under threat of big fines. It costs them over $20,000 a year for reports, fees and permits mandated by our government. Can it get anymore insane?
  • Red Branch Rodney 2011/12/07 00:06:39
    Red Branch
    +4
    Yes, and Obama is seeing that more insane regs are issued every day.

    Congress is allowing him to exclude them from their legislative role and use the executive branch to write the regs and enforce the regs. This is exactly what our Constitution set out to prevent from happening.
  • Rodney Red Branch 2011/12/07 01:13:34
    Rodney
    +2
    Too bad we have so many GUTLESS wonders in office right now.
  • Red Branch Rodney 2011/12/07 05:11:06
    Red Branch
    +1
    It will be the death of all of us.
  • Verbal 2011/12/06 22:49:33
    Verbal
    +1
    What pharmaceutical company hasn't bent the rules a little. There's mad money in being the dope man

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