Drug Manufacturer Agrees To Pay $3.5 Million To Settle Lawsuit Alleging That It Submitted False Claims To Medicaid

On February 22, 2010, the U.S. Department of Justice announced that it had entered into a settlement agreement with Eon Labs, Inc. (a subsidiary of Novartis AG) to resolve a False Claims Act lawsuit alleging that the company had submitted false claims to Medicaid in connection with its drug Nitroglycerin Sustained Release (SR) capsules.  In April 1999, the U.S. Food and Drug Administration concluded that Nitroglycerin SR lacked substantial evidence of effectiveness and published a notice to withdraw approval of the drug.  According to the lawsuit, after the FDA notice Nitroglycerin SR was no longer eligible for reimbursement by government health-care programs such as Medicaid.  Yet,  from April 1999 through September 2008, Eon submitted quarterly reports to the government that misrepresented Nitroglycerin SR’s regulatory status and failed to state that Nitroglycerin SR no longer qualified for Medicaid coverage.  Eon agreed to pay $3.5 million to settle the lawsuit.  The whistleblower that filed the qui tam lawsuit on behalf of the government will receive approximately $525,000 of the settlement proceeds for reporting the alleged fraud to the government.



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