Pharmacist Settles Whistleblower Case for $1M

A Michigan pharmacist and two specialty pharmacies that he formally owned have agreed to pay $1 million to resolve allegations that they submitted false claims to Medicare for the drug Evzio, an injectable form of naloxone commonly used to reverse opioid overdose.

The government alleged that between August 2017 and June 2019, People’s Drug Store and Ray’s Drugs submitted false and misleading prior authorization requests for Evzio based simply on a list of patients for which they had only basic information.

“At times, Kaléo sales representatives provided defendants with lists of patients that pain management or addiction treatment doctors had seen on a given day, with only rudimentary patient demographic identifiers such as name, date of birth, and phone number.  Defendants initiated Evzio prescriptions based on these rudimentary patient lists,” according to the lawsuit.

The pharmacist, identified as Riad “Ray” Zahr, included prior authorization requests purportedly written by physicians who never reviewed or signed them. Evzio was the highest-priced version of naloxone on the market and insurers often required prior authorization before approving payment.

It also was alleged that the defendants waived any co-pay obligations for Medicare patients, which ranged from less than $10 to more than $3,000.

The case was brought in January 2018 by a whistleblower, Rebecca Socol, a former employee of Kaléo, which manufactures Evzio. United States ex rel. Socol v. Plymouth Towne Care Pharmacy, Inc. As part of the resolution of the case, Socol will receive $200,000.

Last month, the U.S. Department of Justice announced that Kaléo agreed to pay $12.7 million to resolve allegations that it caused the submission of false claims for Evzio.

In that case, the government alleged that between March 2017 and April 2020, the Virginia-based pharmaceutical manufacturer directed doctors to send Evzio prescriptions to certain preferred pharmacies. They, in turn, submitted false prior authorization requests for Evzio that misrepresented to insurers that the prescribing physicians submitted the request when the pharmacies did so and/or contained false or misleading assertions about the patients’ medical histories, such as false statements that patients had previously tried and failed less costly alternatives to Evzio. It also alleged that Evzio was dispensed by these pharmacies without collecting or attempting to collect co-payments from beneficiaries.

It was alleged that Kaléo knew of or deliberately ignored this misconduct and kept directing business to these pharmacies. The United States also alleged that Kaléo provided illegal payments to prescribing physicians and their office staff in violation of the Anti-Kickback Statute to induce and reward them for prescribing the drug.

In November, 2018, Kaléo was the target of a report from the Senate’s Permanent Subcommittee on Investigations, which found the company raised the price of Evzio from $575 in 2014 to $4,100 three years later, a move that cost the government more than $142 million over a four-year period.

It is clear that the government, often with the help of whistleblowers, has no intention of slowing down its efforts to go after healthcare fraud.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action. For more information call 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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