Drug Companies Up to Their Old Tricks

We hear what seem like the same old stories over and over, but here it goes again. Yet another drug company has entered into a multi-million dollar settlement with the government over allegations that it engaged in health care fraud by falsely claimed eligibility for federal reimbursement for its drug.

The U.S. attorney’s office in Boston alleged that Eon Labs Inc., a subsidiary of Swiss drug giant Novartis AG, misrepresented the regulatory status of its drug  Nitroglycerin SR and failed to advise the government that the drug did not qualify for Medicaid coverage. The whistleblower lawsuit under the False Claims Act claimed that Eon kept going with the fraud even after the FDA determined that there was little evidence that the drug was effective.

The trouble all started for Eon in 1999, when the FDA determined that there was a lack of evidence that Nitroglycerin SR was effective at treating angina pectoris as Eon claimed it was. The FDA then published a notice in the Federal Register proposing to withdraw approval of the drug. Under Section 505(e) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 355(e)), the FDA can withdraw approval for various reasons. These include evidence based on new tests or methods that show that the drug is not safe or effective.

As of the date in 1999 when the FDA proposed withdrawing approval, Nitroglycerin was no longer eligible for federal reimbursement. However, until September 2008, Eon kept right on with what it was doing, submitting false quarterly reports to the Centers for Medicare and Medicaid Services that misrepresented the drug’s regulatory status in order to get paid.

The qui tam action is United States ex rel. Constance Conrad v. Eon Labs, Inc., et al., No. o2-CV 11738 (D. Mass.).

The health care whistleblower, Constance Conrad, will receive approximately $525,000 out of the settlement. This is a just reward for informing the government of fraud spanning more than a decade!

For additional information about the False Claims Act and whistleblowing, please contact one of our False Claims Act attorneys.