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Novartis Unit to pay U.S. $3.5 million to settle false claims case
- Tuesday, 23 February 2010 18:21
- Last Updated on Wednesday, 05 September 2012 06:25
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Eon Labs Inc. will pay the federal government $3.5 million to settle False Claims Act allegations relating to the company’s drug Nitroglycerin Sustained Release capsules and its eligibility for Medicaid coverage. Eon Labs Inc is a subsidiary of Sandoz Inc., which in turn is a subsidiary of Novartis AG.
In 1999, The Food & Drug Administration decided that Nitroglycerin SR lacked substantial evidence of its effectiveness and withdrew approval of the product as well as its eligibility for reimbursement by government health care programs such as Medicaid. The government found that from April 1999 through September 2008 Eon labs submitted false quarterly reports to the government that misrepresented Nitroglycerin SR and failed to report Nitroglycerin SR as no longer qualifying for Medicaid reimbursement. Eon Labs knowingly submitted fraudulent Medicaid claims to the government.
"We expect manufacturers to be truthful about the regulatory status of their drugs, and we will pursue those companies that submit false information to obtain payment for unapproved drugs that are less than effective or on the market illegally," said Tony West, assistant attorney general for the Civil Division, in a media release.
The settlement resolves allegations against Eon in a multi-defendant whistleblower action: United States ex rel. Conrad v. Eon Labs, Inc., et al. Under this settlement, the whistleblower will receive approximately $525,000.
"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," said Carmen Ortiz, U.S. Attorney for the District of Massachusetts, in a media release.
This case is just one example of the government’s efforts to take down health care fraud. Since January 2009 the Justice Department has recovered approximately $2.2 billion in cases specifically targeting health care fraud.