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Attorney General Cuccinelli announces settlement with Texas-based pharmaceutical manufacturer for illegal marketing of Xenaderm
~Virginia's Medicaid program to receive more than $223,000 in settlement~
RICHMOND (February 27, 2013) - Today, Attorney General Ken Cuccinelli announced that his office has reached a settlement with Texas-based pharmaceutical manufacturer Healthpoint, Ltd. and its general partner, DFB Pharmaceuticals, for the illegal marketing of Xenaderm, a topical treatment for skin ulcers. The attorney general said that the agreement will resolve allegations that Healthpoint submitted false claims to Virginia's Medicaid program for the unapproved drug.
The settlement resolves federal and state False Claims Act cases brought against Healthpoint in the U.S. Federal District Court in Massachusetts. The cases were brought by the U.S. Department of Justice and fifteen plaintiff states. As part of a $48 million settlement announced by the Department of Justice on December 6, 2012, Healthpoint and DFB will pay approximately $33 million total to settle Medicaid-based claims nationally. The settlement will return $223,283.17 to the commonwealth's Medicaid program.
The federal and state complaints alleged Healthpoint marketed Xenaderm without FDA approval by modeling it on a pre-1962 drug that the FDA had never reviewed. Additionally, Healthpoint marketed the drug in spite of the FDA's determination in the 1970s that Xenaderm's principal ingredient was "less-than-effective" for its intended use. 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 still misrepresented the regulatory status of Xenaderm when it submitted quarterly reports to the government and, as a result, knowingly submitted false Xenaderm claims to Medicaid programs.
A National Association of Medicaid Fraud Control Units (NAMFCU) team participated in the settlement negotiations with Healthpoint on behalf of the settling states. Team members included representatives from attorney general's offices of Virginia, Florida, North Carolina, Ohio, and Massachusetts. Assistant Attorney General Megan L. F. Holt served on the NAMFCU Settlement Team.
**The claims settled by this agreement are allegations only; there has been no determination of liability.