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DFB Pharmaceuticals Agrees to Settle Whistleblower Allegations

DFB Pharmaceuticals, Inc. and its subsidiary Healthpoint Ltd. based in Ft. Worth, Texas, have agreed to settle allegations that they violated the False Claims Act in connection with the prescription drug Xenaderm. According to the U.S. Department of Justice, the terms of the agreement call for the companies to pay $28 million, plus an additional $20 million if there is a change in ownership of either entity in the next three years.

The complaint, filed in 2002 by whistleblower Constance Conrad under the qui tam provisions of the False Claims Act, related to the sale of Xenaderm, a prescription drug that was ineligible for payment under Medicare and Medicaid because it had not been approved by the Food and Drug Administration (“FDA”).

In 2011, the U.S. intervened in the qui tam suit and alleged that Healthpoint knowingly launched Xenaderm, a skin ointment primarily used to treat bed and pressure sores, without any approval from the FDA. According to the government, the active ingredient in Xenaderm is trypsin, which was determined by the FDA to be ineffective. As a result, the FDA rescinded the market approval for products containing trypsin as the active ingredient.

The whistleblower and government alleged that Healthpoint Ltd. knowingly submitted false statements to the United States concerning the regulatory status of Xenaderm, resulting in the submission of false prescription claims to the government health care programs in violation of the False Claims Act.

Under the qui tam provisions of the False Claims Act, the whistleblower will receive a portion of the settlement proceeds as her reward.