False Claims Act Blows Up On Eon Labs, Which Will Pay $3.5 Million To Settle Charges

Continuing its efforts on the False Claims Act front, the federal government announced today the first FCA settlement with a drug company that sought to charge the government for less than effective drugs. Under the agreement, Eon Labs Inc. will pay the U.S. $3.5 million to resolve FCA allegations relating to the company's drug Nitroglycerin Sustained Release (“SR”) capsules. Eon is a subsidiary of Sandoz Inc., which is in turn a subsidiary of Novartis AG. 

In April 1999, the Food & Drug Administration determined that Nitroglycerin SR lacked substantial evidence of effectiveness and published a notice proposing to withdraw approval of the product. The government contends that, after the FDA notice, Nitroglycerin SR no longer was legally eligible for reimbursement by government health care programs such as Medicaid.
 
The government further alleges that, from April 1999 and continuing through September 2008, Eon submitted false quarterly reports to the government that misrepresented Nitroglycerin SR's regulatory status and failed to advise that Nitroglycerin SR no longer qualified for Medicaid coverage. As a result, the government contends, Eon knowingly caused false Medicaid claims to be submitted for Nitroglycerin SR.
 
The settlement resolves allegations against Eon in a multi-defendant whistleblower action entitled United States ex rel. Conrad v. Eon Labs, Inc., et al. Under this settlement, the whistleblower will receive approximately $525,000.