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Drugmaker to pay Massachusetts $1 mln to settle illegal marketing claims

2/25/2013 COMMENTS (0)

By Daniel Wiessner

Feb 25 (Reuters) - Drugmaker Healthpoint Ltd will pay the state of Massachusetts nearly $1 million to settle claims that it illegally marketed an unapproved prescription drug, the state's attorney general announced on Friday.

The settlement with Healthpoint and its general partner DFB Pharmaceuticals, Inc, was part of a $48 million national settlement to resolve allegations that Healthpoint charged Medicaid and Medicare for Xenaderm even though it had not been approved by the Food and Drug Administration. Xenaderm is a skin ointment used to treat bed and other pressure sores.

Massachusetts Attorney General Martha Coakley on Friday said her state would receive $996,000.

"This settlement demonstrates the importance of policing the pharmaceutical industry and remaining vigilant with respect to drug marketing misconduct," Coakley said in a statement.

The Texas-based company has not admitted wrongdoing. Michael Loucks and Kara Fay of Skadden, Arps, Slate, Meagher & Flom, who represented Healthpoint in the federal suit, did not return requests for comment.

The larger settlement was announced in December by the U.S. Justice Department, which in 2011 filed a complaint under the False Claims Act against Healthpoint in the District of Massachusetts.

The active ingredient in Xenaderm is trypsin, which in the 1970s was found by the FDA to be ineffective for treating skin sores, the complaint said. Federal prosecutors alleged Healthpoint knew trypsin was unapproved but falsely marketed Xenaderm to nursing homes as an approved drug.

According to the complaint, Healthpoint submitted false statements about the regulatory status of Xenaderm to obtain Medicaid and Medicare reimbursements.

The complaint says the alleged scheme cost Medicare and states' Medicaid programs tens of millions of dollars.

Healthpoint in December agreed to pay up to $33 million to 47 states, as well as $15 million to the Medicare prescription drug benefit program, to settle the False Claims suit.

The Healthpoint case is part of a larger crackdown on the sale of unapproved pharmaceuticals. In October, the FDA ordered more than 4,100 online pharmacies to stop selling unapproved drugs.

The first False Claims settlement involving unapproved drugs came in 2010, when Eon Labs agreed to pay $3.5 million to resolve allegations that it continued to sell a drug that had been deemed ineffective by the FDA, according to a Justice Department press release.

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