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For Immediate Release

Media Contacts:

David Paulson, 410-576-6357

Alan Brody, 410-576-6956

AG Gansler Secures $48 Million Settlement Over False Claims and Improper Marketing of the Unapproved Ointment Xenaderm
Medicaid fraud complaint to return nearly $350,000 to Maryland

Baltimore, MD ( Feb. 22, 2013) - Attorney General Douglas F. Gansler announced today that Maryland, joined by the federal government and 15 other plaintiff states, has reached a settlement with Texas-based pharmaceutical manufacturer Healthpoint, Ltd., and its general partner, DFB Pharmaceuticals. The settlement resolves allegations that Healthpoint caused false claims to be submitted to the Maryland Medicaid program for Xenaderm, a prescription skin ointment used for the treatment of bedsores in nursing home patients, without the required Food and Drug Administration (FDA) approval.

"We caught this drug company trying to deceive nursing home patients and Maryland Medicaid," said Attorney General Gansler. "The money will be returned to the state and our federal partners to treat Marylanders who need and deserve proper medical care."

The federal and state complaints alleged Healthpoint marketed Xenaderm without FDA approval by modeling it on a pre-1962 drug that the FDA never reviewed. Additionally, the FDA determined in the 1970s that Xenaderm's principal ingredient was "less-than-effective" for its intended use.

As part of a $48 million settlement with the federal government and 47 states, Healthpoint and DFB Pharmaceuticals will pay roughly $33 million to settle Medicaid-based claims nationally. The settlement will return $345,428 to the state's Medicaid program, representing both the state and federal portion of the improper expenditures. The settlement resolves federal and state False Claims Act cases brought against Healthpoint in the U.S. District Court for the District of Massachusetts by the U.S. Department of Justice and 15 plaintiff states, including Maryland.

Since 1981, federal health care programs, including Medicaid, have not paid for "less-than-effective" drugs or drugs "identical, related, or similar" to "less-than-effective" drugs. According to the federal and state complaints, Healthpoint nevertheless misrepresented the regulatory status of Xenaderm when it submitted quarterly reports to the government and as a result, knowingly caused false claims to be submitted for Xenaderm to Medicaid programs.

A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Healthpoint on behalf of the settling states. In making the announcement, Attorney General Gansler thanked Assistant Attorney General Shelly Marie Martin for her work on this case.


Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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