AG Gansler Secures Settlement with K-V Pharmaceutical
Medicaid fraud claims involved drugs not
approved by FDA
Baltimore, MD (March 7, 2012) - Attorney General Douglas F. Gansler today announced that Maryland, along with multiple states and the federal government, has reached an agreement with K-V Pharmaceutical Company to settle allegations that the company caused false claims to be submitted to the Medicaid program. Under the agreement, K-V will pay the states and the federal government a total of $17 million to compensate Medicaid and various federal health care programs for the violations. The federal share of the settlement is $10,158,695, and the states' share of the settlement is $6,841,305. Maryland will receive $36,377.
"This company not only defrauded taxpayers, it put the health of many Marylanders at risk," said Attorney General Gansler. "If a drug isn't safe and effective, then Medicaid doesn't pay for it and K-V knew it."
K-V was the St. Louis-based parent company of now-defunct Ethex Corporation. The State alleges that Ethex failed to advise the Centers for Medicare and Medicaid Services that two unapproved products did not qualify for coverage under federal and state health care programs. Ethex is alleged to have submitted false quarterly reports to the federal government related to a pair of drugs, Nitroglycerin Extended Release Capsules (Nitroglycerin ER) and Hyoscyamine Sulfate Extended Release Capsules (Hyoscyamine ER). While the active ingredients in those medications have been in products on the market for many years, the Food and Drug Administration made determinations in the late 1990s that resulted in the drugs being ineligible for reimbursement by government health care programs such as Medicaid.
The settlement resolves allegations that Ethex misrepresented the regulatory status of both drugs and failed to advise that these unapproved drugs did not qualify for coverage under federal health care programs. As a result, the government contends Ethex knowingly caused false claims to be submitted for Nitroglycerin ER and Hyoscyamine Sulfate ER. Ultimately, neither drug ever received full regulatory approval for safety and effectiveness and neither product is currently on the market.
A National Association of Medicaid Fraud Control Units team comprised of representatives from New York, South Carolina, Texas and Maine participated in the investigation and conducted the settlement negotiations with K-V on behalf of the settling states.