Novartis Unit, Eon Labs, settles Medicaid fraud allegations for $3.5 Million
In an effort to resolve a qui tam claim regarding submitting false claims to Medicaid for Nitroglycerin Sustained Release (SR) capsules, Novartis Unit, Eon Labs Inc. agreed to pay the U.S. $3.5 million. The U.S. Department of Justice (DOJ) indicated that the settlement “resolves allegations against Eon in a multi-defendant whistleblower action,” case titled United States ex rel. Conrad v. Eon Labs, Inc., et al.
The U.S. Food and Drug Administration concluded in April 1999 that Nitroglycerin SR was “no longer legally eligible for reimbursement” by Medicaid and other government-run health care programs. According to the DOJ, Eon Labs, Inc., allegedly submitted false quarterly reports that included Nitroglycerin SR to the government from April 1999 through September 2008.
U.S. Attorney for the District of Massachusetts, Carmen M. Ortiz, stated the following:
"This is the first False Claims Act agreement with a drug company that sought to charge the government for less than effective drugs, and it shows that the Department of Justice will pursue those who market such drugs and expect the government to pay for them."
Under the False Claims Act, private persons are able to file a whistleblower and qui tam lawsuit on behalf of the U.S. government. If the claim is resolved successfully, the whistleblower may be entitled to receive a share of the settlement. According to the DOJ, the whistleblower involved in this claim will receive approximately $525,000.
Click on the following link to read more on the Eon Labs False Claims Act Settlement, Department of Justice and The Wallstreet Journal.
This kind of action will be a kind of eye opener for other pharma companies not to involve in any such type of cases.