Kaléo Inc. Agrees to Pay $12.7 Million to Resolve Allegations of False Claims for Anti-Overdose Drug
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.
“Truthful and accurate documentation is essential to the integrity of federal health care programs,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates that the department will hold to account those who undermine these programs by causing false claims to be submitted to the government.”
“When a pharmaceutical manufacturer knowingly engages with bad actors, they hurt the federal health care system — and they can expect us to see it,” said Acting U.S. Attorney Nathaniel R. Mendell for the District of Massachusetts. “Today’s settlement is our latest signal to pharmaceutical manufacturers that my office does not tolerate health care fraud and will continue to pursue enforcement.”
“The American people, as both taxpayers and consumers, expect pharmaceutical companies like kaléo to abide by relevant laws and regulations,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services, Office of the Inspector General (HHS OIG). “When a pharmaceutical company participates in fraud in order to boost profits, it erodes public confidence in the health care system, can compromise the patient-physician relationship and wastes valuable government health care program funds. We will continue to investigate allegations of fraud in close cooperation with our law enforcement partners.”
“Today’s settlement resolves allegations that kaléo used gifts to incentivize and reward providers for prescribing the company’s pricey anti-overdose drug, while turning a blind eye to pharmacies' fraudulent practices that fleeced taxpayer-funded health care programs — programs that all of us pay for and depend on,” said Special Agent in Charge Joseph R. Bonavolonta of the FBI Boston Division. “These unsavory tactics only fuel the FBI’s and our law enforcement partners’ commitment to aggressively root out those who seek to boost their bottom line at the expense of hard-working taxpayers.”
“False claims undermine the integrity of the Federal Employees Health Benefits Program,” said Deputy Inspector General Performing the Duties of the Inspector General Norbert E. Vint of the U.S. Office of Personnel Management, Office of the Inspector General (OPM OIG). “The OPM OIG is committed to protecting the federal health care programs from deceptive schemes that increase the cost of medical care and waste taxpayer dollars.”
“Protecting TRICARE, the health care system for military members and their dependents, is a top priority for the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS),” said Special Agent in Charge Patrick J. Hegarty of DCIS, Northeast Field Office. “When companies submit false authorizations for high-priced medical goods and services, they undermine the integrity of TRICARE and place an unnecessary financial burden on the program. The settlement agreement announced today is the result of a joint effort and demonstrates the DCIS’ ongoing commitment to work with our law enforcement partners to investigate health care fraud.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Rebecca Socol, a former employee of kaléo. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of the resolution with kaléo, Ms. Socol will receive $2,548,600 of the settlement amount. The qui tam case is captioned United States ex rel. Socol v. kaléo, Inc., 18-cv010050-RGS (D. Mass.) (under seal).
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from the HHS OIG; DCIS; OPM OIG; the FBI; and the U.S. Postal Service Office of Inspector General.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The matter was handled by Trial Attorney Sarah Arni and Assistant U.S. Attorneys David Derusha and Abraham George.
The claims resolved by the settlement are allegations only and there has been no determination of liability.