Schwarz Pharma to pay $22 million settlement concerning reimbursement claims for unapproved drugs
April 29th, 2010 - 10:44 pm ICT by BNO NewsBOSTON, MASSACHUSETTS (BNO NEWS) – Schwarz Pharma Inc. will pay $22 million to settle False Claims Act allegations that the company failed to notice the Centers for Medicare and Medicaid Services (CMS) that two unapproved products did not qualify for coverage under federal health care programs, U.S. Attorney Carmen Ortiz said on Thursday.
Schwarz was accused of submitting false quarterly reports to the government related to a pair of drugs, Deponit and Hyoscyamine Sulfate Extended Release (Hyoscyamine Sulfate ER).
Deponit is a nitroglycerin skin patch which is used to prevent angina. Hyoscyamine Sulfate ER is an antispasmodic medication used to treat various stomach, intestinal, and urinary tract disorders that involve cramps, colic, or other painful muscle contractions.
Both drugs have been in the market for many years; however the Food and Drug Administration (FDA) ruled these drugs as ineligible for reimbursement by government health care programs in the late 1990’s. The FDA said that these drugs were new and required more testing to ensure its safety and effectiveness. In 1997, the FDA found Deponit to be less effective and proposed to remove it from the market. Neither product is currently in the market.
Schwarz failed to disclose the complete status of these two drugs to the CMS, as well as the fact that the drugs did not qualify for reimbursement in health care programs. Schwarz Pharma knowingly caused false claims to be submitted for Deponit and Hyoscyamine Sulfate ER.
“This False Claims Act agreement shows that the Department of Justice will not allow manufacturers to evade the drug approval process and expect the government to pay for less than effective drugs,” U.S. Attorney Ortiz declared.
From the $22 million that Schwarz agreed to pay, $12,243,836 will go to the federal government while $9,756,164 will be paid to Medicaid.
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