DOJ Announces Settlement With Cary-based Veloxis Pharmaceuticals, Largest Sunshine Act Recovery In History
This week, the United States Department of Justice announced a settlement with Cary-based Veloxis Pharmaceuticals. Veloxis will pay over $46 million to resolve criminal and civil allegation that it paid kickbacks to induce prescriptions and purchases of Envarsus XR (Envarsus), a kidney transplant immunosuppression drug.
As part of the government’s resolution with Veloxis, the company entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of Massachusetts charging Veloxis with conspiracy to commit violations of the federal Anti-Kickback Statute by paying for, among other things, lavish meals, alcohol, and luxury resort stays, to induce healthcare providers to recommend or prescribe Envarsus. As part of the DPA, Veloxis has agreed to pay a criminal penalty of more than $10 million.
“Today’s resolution should serve as a warning to any healthcare company that tries to improperly influence the decisions of healthcare providers,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “Kickbacks can erode medical decision-making, result in unnecessary prescriptions of branded drugs, and waste federal healthcare funds.”
“Attempting to improperly influence medical decision-making for financial gain is dangerous, yet it is exactly what Veloxis was doing. Instead of prioritizing patient safety, they were prioritizing profits,” said U.S. Attorney Leah B. Foley for the District of Massachusetts. “Treatment decisions need to be based on what’s best for the patient, not what’s best for the drug manufacturer’s bottom line, or what lavish meal or resort stay they can offer. We remain committed to protecting the integrity of taxpayer-funded health care programs. Drug manufacturers should know that the federal government will use all available enforcement mechanisms to stop the payment of illegal health care kickbacks.”
“Today’s settlement resolves allegations that Veloxis operated with a principal focus on sales, providing kickbacks in the form of luxury resort stays, lavish meals, and payments to induce health care professionals to recommend and prescribe its kidney transplant immunosuppression drug,” said Special Agent in Charge Ted E. Docks of the FBI Boston Field Office. “It’s harmful when pharmaceutical companies prioritize profits over patients. Just know that the FBI and our partners are committed to fighting health care offenses, one case at a time, and seeing perpetrators held accountable.”
“Kickbacks that distort medical decision making put patients at risk and undermine trust in our health care system,” said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Veloxis used lavish perks and concealed payments to push its drug, and today’s resolution makes clear that this conduct will not be tolerated. HHS OIG will continue working with our law enforcement partners to protect patients, uphold the integrity of federal health care programs, and hold companies accountable when they violate the law.”
Today’s resolution also includes a civil settlement of allegations that Veloxis caused the submission of false claims to federal healthcare programs by paying kickbacks to hospital personnel and specialty pharmacies, in violation of the False Claims Act. Veloxis has agreed to pay $34.45 million to the United States and certain states to resolve those civil allegations. In addition, Veloxis agreed to pay a $1.55 million civil penalty to the Centers for Medicare & Medicaid Services (CMS) to resolve allegations that Veloxis knowingly failed to report to CMS certain payments to physicians under the Open Payments Program (also known as the “Sunshine Act”). This is the largest Sunshine Act recovery since the law was passed in 2010.
As part of the criminal resolution and the Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General, Veloxis has agreed to implement a significant corporate compliance program, including adoption of an enhanced system of policies, procedures, and internal controls designed to deter and detect violations of the Anti-Kickback Statute, and implementation of enhanced oversight, reporting, and enforcement mechanisms.
