Pharma company Kaleo pays $12.7 million to settle whistleblower’s fraud claims

by Ben Vernia | November 10th, 2021

On November 9, the Department of Justice announced that Virginia-based pharmaceutical manufacturer Kaleo, Inc., has agreed to pay $12.7 million to settle fraud allegations, originally brought by a whistleblower, that the company steered physicians’ prescriptions to pharmacies

kaléo Inc., a Virginia-based pharmaceutical manufacturer, has agreed to pay the United States $12.7 million to resolve allegations that kaléo caused the submission of false claims for the drug Evzio, an injectable form of naloxone hydrochloride indicated for use to reverse opioid overdose. Evzio was the highest-priced version of naloxone on the market, and insurers frequently required the submission of prior authorization requests before they would approve coverage for Evzio.

The United States alleged that, between March 14, 2017, and April 30, 2020, kaléo directed prescribing doctors to send Evzio prescriptions to certain preferred pharmacies that in turn (1) submitted false prior authorization requests for Evzio that misrepresented to insurers that the prescribing physicians submitted the request when the pharmacies did so and/or contained false or misleading assertions about the patients’ medical histories, such as false statements that patients had previously tried and failed less costly alternatives to Evzio, and (2) dispensed Evzio without collecting or attempting to collect co-payment obligations from government beneficiaries. The United States contends that kaléo knew of or deliberately ignored this pharmacy misconduct, but nevertheless kept directing business to these pharmacies. The United States also alleged that kaléo provided illegal remuneration to prescribing physicians and their office staff in violation of the Anti-Kickback Statute to induce and reward their prescribing of Evzio.

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The whistleblower, a former employee of Kaleo, will receive $2,548,600 of the settlement amount (a 20% relator’s share).

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