KV Pharmaceutical/Ethex to pay $17 million to settle Whistleblower Lawsuit for Marketing Unapproved Drugs

The federal government has announced a $17 million settlement of a False Claims Act qui tam action with KV Pharmaceutical Company, the parent company of now-defunct Ethex Corporation. The qui tam lawsuit alleged that dozens of small and mid-sized pharmaceutical companies have been allowed (and some continue to be allowed) to sidestep the FDA drug approval process and manufacture and distribute unapproved drugs, ultimately prescribed to Medicaid patients, jeopardizing the safety of millions of Americans and thwarting federal law. This multi-defendant lawsuit has led to the recovery of hundreds of millions of dollars for Government Health Care Programs.According to the qui tam complaint, several pharmaceutical companies, including Ethex Corporation, had, time and time again, deceived the government by falsely certifying that their unapproved drugs had passed the requisite FDA tests for safety and effectiveness, or otherwise met with the statutory definition of a Covered Outpatient Drug. These false certifications allowed the drug companies to peddle their unapproved products to physicians of Medicaid patients and to wrongfully receive payments from Government Health Care Programs.This settlement quieted allegations that Ethex continued to market and receive government health care dollars for two medications that had lost FDA approval. The two medications, Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules, lost their approvals in April of 1999 and March of 1997, respectively. The company is alleged to have intentionally failed to notify the Centers for Medicare & Medicaid Services(CMS) that these medications were no longer a covered outpatient drug.Under the federal Food, Drug & Cosmetic Act, 21 U.S.C. § 301 et seq., every drug must be approved by the FDA for safety and effectiveness before it can be marketed to the public. These drugs were not. Ultimately, the FDA determines whether the drug is safe and effective in its proposed use(s), whether the benefits of the drug outweigh the risks, and whether the methods used in manufacturing the drug and the controls used to maintain the drug’s quality are adequate to preserve the drug’s identity, strength, quality, and purity.