For Immediate Release - February 22, 2013

Healthpoint to Pay $996,000 to Massachusetts to Resolve Allegations of Illegal Drug Marketing

AG Claims Pharmaceutical Company Sold Ineffective Drug to MassHealth

BOSTON – A Texas-based company will pay Massachusetts $996,000, as part of a $48 million settlement, to resolve allegations it charged MassHealth for an ineffective drug called Xenaderm, Attorney General Martha Coakley announced today.

The settlement with Healthpoint, Ltd. and its general partner, DFB Pharmaceuticals, Inc. (DFB), stems from a $48 million settlement announced by the United States Department of Justice in December, under the terms of which Healthpoint and DFB will pay approximately $33 million of that to settle Medicaid-based claims nationally, along with $15 million to the Medicare prescription drug benefit program. The settlement will return $666,500 plus interest directly to MassHealth and $329,550 in federal funding for the state’s Medicaid program.

“Illegal drug marketing imposes unnecessary costs on the Medicaid system and taxpayers that are footing the bill,” said AG Coakley. “This settlement demonstrates the importance of policing the pharmaceutical industry and remaining vigilant with respect to drug marketing misconduct.”

According to the Commonwealth’s complaint, Healthpoint allegedly marketed the ointment Xenaderm without FDA approval by modeling it on a pre-1962 drug that the FDA also never reviewed either. In the 1970s, the FDA determined that Xenaderm’s principal ingredient was “less-than-effective” for its intended use in treating wounds such as pressure ulcers often suffered by the elderly in nursing homes.

Since 1981, federal health care programs including Medicaid, have not paid for “less-than-effective” drugs. However, Healthpoint still allegedly misrepresented the regulatory status of Xenaderm to MassHealth and other state Medicaid programs from 2002 to 2006.

The settlement with Healthpoint resolves the federal and state False Claims Act case in the United States District Court for the District of Massachusetts brought by the United States Department of Justice and 15 states, including Massachusetts.  A total of 47 states that joined the settlement will be receiving money as a result.

The case was litigated by Assistant Attorneys General Kriss Basil and Robert Patten, with assistance from Deputy Chief of Investigations Steve Devlin, Analyst Tony Megathlin, and Investigator Jessica Roy of AG Coakley’s Medicaid Fraud Division. The Medicaid Fraud Division litigated the case in coordination with the U.S. Attorney’s Office for the District of Massachusetts and the U.S. Department of Justice Civil Frauds Division. A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Healthpoint on behalf of the settling states.  Team members included representatives from Offices of the Attorneys General for the States of Florida, North Carolina, and Ohio and the Commonwealths of Massachusetts and Virginia.

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