NJ Receives More Than $900,000 From Settlements Resolving Allegations of Wrongdoing by Two Pharmaceutical Manufacturers

TRENTON – Attorney General Jeffrey S. Chiesa announced today that New Jersey has received a combined total of more than $900,000 as a result of its participation in separate global settlements resolving civil allegations against two pharmaceutical manufacturers – Healthpoint, Ltd. And Victory Pharma, Inc., as well as criminal charges against Victory Pharma.

Healthpoint is a Texas-based drug-maker that allegedly caused false claims to be submitted to the Medicaid program for an unapproved medication known as Xenaderm. Victory Pharma is a California-based drug manufacturer that had been accused of paying unlawful inducements to physicians to prescribe its drugs.

Under a multi-state/federal settlement, Healthpoint and its general partner DFB Pharmaceuticals has paid a total of $48 million to the federal government and 15 participating states, including New Jersey, to resolve state and federal False Claims Act cases. Healthpoint’s settlement payout to New Jersey Medicaid of $607,704 was received last week.

A complaint filed on behalf of federal and state governments against Healthpoint alleged that the company marketed Xenaderm without approval from the federal Food and Drug Administration (FDA). In the 1970s, FDA characterized Xenaderm’s principal ingredient as “less than effective” for its intended use. That categorization disqualified it for Medicaid coverage, as federal health care programs, including Medicaid, have declined to pay for “less than effective” drugs since 1981.

However, according to the complaint, which cited federal and state false claims act provisions, Healthpoint misrepresented the regulatory status of Xenaderm in quarterly reports submitted to the government, and as a result knowingly caused false Medicaid claims to be submitted for the medication.

A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Healthpoint on behalf of the participating states. Team members included representatives from the Attorney General’s Offices in Florida, North Carolina, Ohio, Massachusetts and Virginia. Under the global Healthpoint settlement, Healthpoint admits no liability.

As a result of the Victory Pharma settlement, Victory has paid the federal government and the participating states, including New Jersey, a total of $12.2 million in civil damages to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct. Victory’s payout to New Jersey Medicaid was $301,401.94, and was received last week.

To resolve concurrent criminal charges brought by the federal government, Victory previously entered into a Deferred Prosecution Agreement, in which the company agreed to waive indictment and acknowledged that the federal government would file a five-count criminal information in federal court.

The participating states and the federal government alleged that, between January 1, 2007 and December 31, 2009, Victory sales representatives made cash and “in-kind” payments — such as consulting arrangements meals at upscale restaurants, tickets to sporting events, and other forms of entertainment — to induce health care professionals to prescribe the Victory-manufactured drugs Fexmid, Dolgic, Naprelan and Xodol.

The resulting prescriptions were paid for or reimbursed by Medicaid, Medicare, TRICARE, the U.S. Department of Veterans Affairs, and the U.S. Department of Labor.

The Victory Pharma multi-state settlement is an outgrowth of a “whistleblower” action that was filed in U.S. District Court for the Southern District of California by a private individual who filed the action under state and federal false claims statutes.

A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted settlement negotiations with Victory Pharma on behalf of the settling states. The team included representation from the states of Indiana, Ohio and Texas.

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