Schwarz Pharma has agreed to pay $22 million to settle allegations that it violated the False Claims Act by misrepresenting the FDA approval status of two of its drugs.  The settlement resulted from two separate qui tam, or whistleblower, actions which named multiple defendants.  In conjunction with the settlement, the two whistleblowers will receive $1,836,575 altogether.

The lawsuit concerned two Schwarz products: Deponit, a nitroglycerin skin patch used to prevent angina, and Hyoscyamine Sulfate ER, an antispasmodic drug used to treat digestive and other disorders involving painful cramping.  In the late 1990s, the FDA disqualified both drugs for reimbursement by government healthcare programs.  In 1997, the FDA announced that extended release products, including Hyoscyamine ER, qualified as “new” drugs and needed to be evaluated and approved by the FDA; in 1999, the FDA found that Deponit was not effective and recommended withdrawing it from the market.  Neither drug ever received the necessary FDA approval.

The government alleges that, in spite of these actions by the FDA, Schwarz continued to represent to the Centers for Medicare and Medicaid Services (CMS) that the drugs were eligible for reimbursement under federal healthcare programs; the misrepresentations allegedly included submission of false quarterly reports.  The government contends that, as a result, Schwarz caused false claims for reimbursement to be submitted to the government for the drugs.

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