HealthpointLtd. and DFB Pharma to pay $48 million to settle whistleblower case over Xenaderm

Healthpoint Ltd. and DFB Pharmaceuticals will pay $48 million to resolve a whistleblower case filed under The False Claims Act as a result of claims being submitted to Medicare and Medicaid for an unapproved drug, Xenaderm, which was ineligible for reimbursement under those programs. The whistleblower Constance Conrad will receive a percentage of that amount up to 25% but the amount has not been determined yet. Under the Federal Food Drug and Cosmetic Act, manufacturers must obtain FDA approval before introducing a new drug into the market. Xenaderm is a skin ointment for the treatment of nursing home patients’ bed sores. The Complaint alleged that Healthpoint’s business strategy was to market new prescription drug products modeled after drug products that were on the market before October 1962 in order to avoid the time, effort and expense of obtaining FDA approval.

At no time, the Complaint said, did Healthpoint complete any double blind placebo controlled clinical studies that established the safety and effectiveness of Xenaderm. Indeed Healthpoint’s own clinical researchers expressly conceded in an internal e-mail that the safety and efficacy data for Xenaderm was ‘cruelly insufficient” to meet FDA standards. Notwithstanding, the company actively promoted Xenaderm as a prescription drug that unlike non-prescription skin ointments such as Vaseline, was “Medicaid reimbursed” and this cost nursing homes nothing to administer to Medicaid patients. Œ

Xenaderm’s principal active ingredient trypsin was less than effective for intended use than other ointments. Œ

Jeffrey Newman represents whistleblowers.