Kaléo Inc has agreed to pay the United States $12.7 million to resolve allegations that Kaléo caused the submission of false claims for the drug Evzio, an injectable form of naloxone hydrochloride indicated for use to reverse opioid overdose, according to a US Justice Dept press release.

Evzio was the highest-priced version of naloxone on the market, and insurers frequently required the submission of prior authorization requests before they would approve coverage for Evzio.

The United States alleged that, between March 14, 2017, and April 30, 2020, kaléo directed prescribing doctors to send Evzio prescriptions to certain preferred pharmacies that in turn (1) 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, and (2) dispensed Evzio without collecting or attempting to collect co-payment obligations from government beneficiaries. The United States contends that kaléo knew of or deliberately ignored this pharmacy misconduct, but nevertheless kept directing business to these pharmacies. The United States also alleged that kaléo provided illegal remuneration to prescribing physicians and their office staff in violation of the Anti-Kickback Statute to induce and reward their prescribing of Evzio. 

“Truthful and accurate documentation is essential to the integrity of federal health care programs,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates that the department will hold to account those who undermine these programs by causing false claims to be submitted to the government.”

“When a pharmaceutical manufacturer knowingly engages with bad actors, they hurt the federal healthcare system — and they can expect us to see it,” said Acting US Attorney Nathaniel R. Mendell for the District of Massachusetts. “Today’s settlement is our latest signal to pharmaceutical manufacturers that my office does not tolerate health care fraud and will continue to pursue enforcement.”

“Today’s settlement resolves allegations that kaléo used gifts to incentivize and reward providers for prescribing the company’s pricey anti-overdose drug, while turning a blind eye to pharmacies’ fraudulent practices that fleeced taxpayer-funded health care programs — programs that all of us pay for and depend on,” said Special Agent in Charge Joseph R. Bonavolonta of the FBI Boston Division. “These unsavory tactics only fuel the FBI’s and our law enforcement partners’ commitment to aggressively root out those who seek to boost their bottom line at the expense of hard-working taxpayers.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Rebecca Socol, a former employee of kaléo. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of the resolution with kaléo, Ms. Socol will receive $2,548,600 of the settlement amount. The qui tam case is captioned United States ex rel. Socol v. kaléo, Inc., 18-cv010050-RGS (D. Mass.) (under seal).