KV Pharmaceutical to Pay $17M Settlement in Whistleblower Lawsuit

By Matt O'Donnell

(LEGAFI) -- KV Pharmaceutical Co. has been ordered to pay $17 million to settle whistleblower allegations that it submitted false claims to the government seeking Medicaid reimbursement for two drugs that are not approved by the FDA.

The KV Pharmaceutical whistleblower lawsuit alleged that Ethex Corp., a now-defunct unit of KV Pharmaceutical, misrepresented the regulatory status of Nitroglycerin ER and Hyoscyamine Sulfate ER and failed to advise the Centers for Medicare and Medicaid Services that these unapproved drugs did not qualify for coverage under the federal health-care programs.

Nitroglycerin ER is used to treat chest pain due to lack of oxygen supply to the heart muscle. Hyoscyamine ER is used to used to treat stomach, intestinal or urinary tract disorders. Neither drug is currently on the market.

In the late 1990s, the Food and Drug Administration found the drugs to be ineligible for reimbursement by government health programs such as Medicaid, but Ethex continued to market and receive government health care dollars for the unapproved medications. These false claims allowed KV Pharmaceutical to promote the unapproved drugs to physicians of Medicaid patients and to wrongfully receive payments from government health care programs, the KV Pharmaceutical whistleblower lawsuit claimed.

Under the KV Pharmaceutical settlement, the company will pay $10.2 million to the U.S. and $6.8 million to states involved in the whistleblower lawsuit. The whistleblower will receive $1.5 million from the U.S. share of the settlement, according to a statement from the Justice Department.

“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, in the statement.

The government encourages private citizens to blow the whistle on companies submitting false bills to the federal government by awarding them 15% to 30% of any money they recover from a whistleblower lawsuit. Medicare fraud is one of the most common ways companies cheat the government.