Pennsylvania Attorney General Kathleen G. Kane announced on Monday, that the Commonwealth has reached a nearly $2 million settlement with Healthpoint Ltd., a Smith & Nephew business (LSE: SN, NYSE: SNN), and DFB Pharmaceuticals to resolve allegations that Healthpoint caused false claims to be submitted to Medicaid for an unapproved drug, Xenaderm. The drug was ineligible for reimbursement by the program.
Pennsylvania’smultimillion-dollar settlement is part of the U.S. Department of Justice’s agreement with Healthpoint Ltd. and DFB Pharmaceuticals to pay up to $48 million to resolve allegations that the company caused false claims to be submitted to both Medicare and Medicaid programs.
The state’s settlement will return nearly $2 million to the PA Department of Public Welfare.
According to complaints, Healthpoint did not accurately represent the regulatory status of Xenaderm when it submitted quarterly reports to the U.S. government and knowingly caused false claims to be submitted for Xenaderm to Pennsylvania’s Medicaid program.
If the drug was not approved by the FDA, the plaintiffs alleged that every bill submitted to the Commonwealth's Medicaid program was a false claim caused by Healthpoint.
Under the Federal Food Drug and Cosmetic Act, manufacturers must obtain Food and Drug Administration (FDA) approval before introducing any new drug into the market. The U.S. Department of Justice intervened in, and later filed, a civil False Claims Act case against Healthpoint, alleging that it launched Xenaderm, a prescription skin ointment for the treatment of nursing home patients’ bed sores, without any FDA approval.
The Pennsylvania Office of Attorney General negotiated the Commonwealth’s claims in the U.S. Department of Justice lawsuit. The National Association of Medicaid Fraud Control Units also participated with the U.S. Department of Justice in the settlement negotiations with Healthpoint, along with Offices of the Attorneys General including Florida, North Carolina, Ohio, Massachusetts and Virginia.