Bryan Cohen Feb. 25, 2013, 6:45pm

BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced Friday the state will receive $996,000 of a $48 million multi-state settlement with a Texas-based company that allegedly charged MassHealth for an ineffective drug.

The settlement with Healthpoint Ltd. and its general partner, DFB Pharmaceuticals Inc., is the result of a $48 million December settlement with 47 states and the federal government. Under the terms of the December settlement, Healthpoint and DFB agreed to pay approximately $33 million to settle Medicaid-based claims nationally and $15 million to Medicare's prescription drug benefit program.

As part of the agreement, Healthpoint and DFB will pay $666,500 plus interest to MassHealth and $329,550 in federal funding to the Massachusetts Medicaid program.

"Illegal drug marketing imposes unnecessary costs on the Medicaid system and taxpayers that are footing the bill," Coakley said. "This settlement demonstrates the importance of policing the pharmaceutical industry and remaining vigilant with respect to drug marketing misconduct."

Healthpoint allegedly marketed the ointment Xenaderm without U.S. Food and Drug Administration approval by modeling it on a pre-1962 drug that was also never reviewed by the agency. In the 1970s, the FDA found that Xenaderm's principal ingredient was less-than-effective for its intended use in treating wounds like pressure ulcers, which are frequently suffered by the elderly in nursing homes.

Since 1981, federal healthcare programs like Medicaid do not pay for less-than-effective drugs. Between 2002 and 2006, Healthpoint allegedly misrepresented the regulatory status of Xenaderm to MassHealth and other state Medicaid programs.

The settlement with Healthpoint resolves the state and federal False Claims Act case in the U.S. District Court for the District of Massachusetts. A total of 47 states will receive money from the settlement.

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