The unapproved bed sore drug Xenaderm, which was marketed to nursing homes as “Medicaid reimbursed,” is the source of a settlement that could reach $48 million for Healthpoint Ltd. and DFB Pharmaceuticals.
The payment will resolve Department of Justice allegations that Healthpoint caused false claims to be submitted to Medicare and Medicaid for the unapproved prescription ointment. The resolution was announced Thursday, noting that no findings of liability were made.
Under the terms of the agreement, Healthpoint and DFB will pay $28 million, plus another $20 million if there is a change in ownership of Healthpoint or DFB over the next three years.
Manufacturers must obtain Food and Drug Administration (FDA) approval before introducing any new drug into the market. In January 2011, the United States intervened and later filed a civil False Claims Act complaint that alleged Healthpoint launched Xenaderm, a prescription ointment for the treatment of bed sores, without FDA approval.
The complaint alleged that Healthpoint’s business strategy was to market new prescription drug products modeled after drug products that were on the market before October 1962 in order to avoid the time, effort, and expense of obtaining FDA approval. The complaint further alleged that at no time prior to its introduction of Xenaderm into the market did Healthpoint complete any double-blind placebo-controlled clinical studies that established the safety and effectiveness of the drug.
Federal authorities also charged that Healthpoint actively promoted Xenaderm as “Medicaid reimbursed” and cost-free for nursing homes administering it to covered patients.