DOJ announces settlement with Sandoz subsidiary over claims about regulatory status of drug

by Ben Vernia | February 22nd, 2010

DOJ announced on February 22 that Eon Labs, Inc., a subsidiary of Sandoz, is paying $3.5 million to settle False Claims Act allegations regarding its statements concerning the regulatory status of nitroglycerin sustained release tablets. According to the press release:

In April 1999, the Food & Drug Administration (FDA) determined that Nitroglycerin SR lacked substantial evidence of effectiveness and published a notice proposing to withdraw approval of the product. The government contends that, after the FDA notice, Nitroglycerin SR no longer was legally eligible for reimbursement by government health care programs such as Medicaid.

The government further alleges that, from April 1999, and continuing through September 2008, Eon submitted false quarterly reports to the government that misrepresented Nitroglycerin SR’s regulatory status and failed to advise that Nitroglycerin SR no longer qualified for Medicaid coverage. As a result, the government contends, Eon knowingly caused false Medicaid claims to be submitted for Nitroglycerin SR.

“We expect manufacturers to be truthful about the regulatory status of their drugs, and we will pursue those companies that submit false information to obtain payment for unapproved drugs that are less than effective or on the market illegally,” said Tony West, Assistant Attorney General for the Civil Division.

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“This is the first False Claims Act agreement with a drug company that sought to charge the government for less than effective drugs, and it shows that the Department of Justice will pursue those who market such drugs and expect the government to pay for them,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.

The case was brought by a whistleblower against several defendants, and was handled by the Massachusetts U.S. Attorney’s office. DOJ announced that the relator would receive $525,000 of this settlement, a 15% share.

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