The settlement was to resolve allegations of wrongfully charging Medicaid and Medicare for the Xenaderm ointment though it was not approved by the FDA. According to Coakley, Massachusetts would be receiving $996,000. She said in a statement, “This settlement demonstrates the importance of policing the pharmaceutical industry and remaining vigilant with respect to drug marketing misconduct.”
However, the Texas-based Healthpoint has not admitted to any wrongdoing.
The national-level settlement had been announced by the DOJ in December last year, over the complaint it had filed under the False Claims Act in 2011. The complaint had filed against Healthpoint in the District of Masschusetts.
According to the complaint by the U.S. Justice Department, Healthpoint had submitted false statements about Xenaderm to get Medicaid and Medicare money. The active ingredient in Xenaderm was found ineffective by the FDA back in the 70s, and prosecutors alleged that Healthpoint had acted with full knowledge that the ingredient, trypsin, was not approved by FDA.
In December, 2012, Healthpoint agreed to a settlement of up to $33 million with 47 states and $15 million for payment to the Medicare prescription drug benefit program.
Healthpoint is by no means alone in such practices. A number of companies, starting with Eon Labs in 2010, have been cornered by the DOJ over false claims. Eon paid $3.5 million to resolve things. In October 2012, the FDA issued an order prohibiting more than four thousand online pharmacies from selling FDA unapproved drugs.
Xenoderm was marketed for the treatment of bed sores and other sores caused by pressure.