Bloomberg News

KV Pharmaceutical to Pay $17 Million in False Claims Case

December 06, 2011

(Updates with company remarks in fifth paragraph.)

Dec. 6 (Bloomberg) -- KV Pharmaceutical Co. agreed to pay $17 million to settle allegations that it made false claims to the U.S. in seeking reimbursement for unapproved drugs.

The settlement resolves allegations made in a whistleblower lawsuit filed in Boston federal court, according to an e-mailed statement today from the Justice Department. The U.S. claimed that Ethex Corp., a now-defunct unit of KV Pharmaceutical, misrepresented the regulatory status of Nitroglycerin ER and Hyoscyamine Sulfate ER, according to the statement.

The Food and Drug Administration found the drugs ineligible for reimbursement by government health programs including Medicaid, the Justice Department said. The company will pay $10.2 million to the U.S. and $6.8 million to states involved in the lawsuit. The whistleblower will receive $1.5 million from the U.S. share of the settlement, according to the statement.

“Today’s settlement underscores our commitment to pursuing pharmaceutical companies that allegedly provide false information to obtain taxpayer dollars for unapproved and ineffective drugs,” said Tony West, assistant attorney general for the Justice Department’s Civil Division.

The $17 million will be paid out over five years, with less than $1 million to be paid within the first year, Greg Divis, president and chief executive officer of the Bridgeton, Missouri-based drugmaker, said in an e-mailed statement.

“We are satisfied with the settlement terms and the resolution of a legacy issue associated with our dissolved Ethex subsidiary,” Divis said.

Nitroglycerin ER is used to treat chest pain due to lack of oxygen supply to the heart muscle. Hyoscyamine ER is an antispasmodic medicine used to treat stomach, intestinal or urinary tract disorders.

The case is U.S., ex rel v. Actavis Mid-Atlantic, 02-11738, U.S. District Court, District of Massachusetts (Boston).

--Editors: Andrew Dunn, Peter Blumberg

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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