Drugmaker admits paying kickbacks to boost transplant drug prescriptions

Veloxis Pharmaceuticals Inc., a Cary, North Carolina-based drug manufacturer, has agreed to pay more than $46 million to resolve criminal and civil allegations that it paid kickbacks to boost prescriptions and purchases of Envarsus XR, a kidney transplant immunosuppression drug, according to the Justice Department.

Veloxis entered into a deferred prosecution agreement tied to a criminal information filed in the District of Massachusetts charging the company with conspiring to violate the federal Anti-Kickback Statute, prosecutors said. According to the company’s admissions and court documents, from October 2016 through approximately June 2023, Veloxis and its employees paid for lavish meals, alcohol, luxury resort stays and purported consulting work that was not performed to induce health care providers to prescribe or recommend Envarsus over a cheaper generic alternative. As part of the agreement, Veloxis will pay a criminal penalty of more than $10 million.

Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said the resolution “should serve as a warning to any healthcare company that tries to improperly influence the decisions of healthcare providers.” U.S. Attorney Leah B. Foley for the District of Massachusetts said Veloxis prioritized profits over patient safety, while FBI Boston Field Office Special Agent in Charge Ted E. Docks said the bureau remains committed to fighting health care offenses and holding perpetrators accountable.

Veloxis admitted that employees falsified expense reports to conceal the scheme, including by inflating attendee lists to reduce the apparent per-person cost of dinners and omitting physicians’ names to avoid federal Sunshine Act reporting requirements. In one instance cited by prosecutors, a Veloxis employee told a surgeon that the employee “need[ed] scripts. Lots of them,” and had previously urged the surgeon to “open your Rolodex and make things happen.”

The civil settlement resolves False Claims Act allegations that Veloxis caused false claims to be submitted to Medicare, Medicaid and TRICARE for Envarsus prescriptions linked to kickbacks paid to health care providers and specialty pharmacies, according to the Justice Department. Veloxis admitted that, from 2017 through 2023, it made per-patient and per-month payments to specialty pharmacies to induce them to purchase Envarsus instead of competing drugs, including a cheaper generic. The company disguised the payments in contracts as compensation for “enhanced services,” such as data collection or adherence services, even though it paid pharmacies without confirming that the specified services had been provided.

Veloxis will pay $21,211,251 to the federal government and $13,238,749 to certain states to resolve the False Claims Act allegations, plus a $1.55 million civil penalty to the Centers for Medicare & Medicaid Services to resolve allegations that it knowingly failed to report certain physician payments under the Open Payments Program, also known as the Sunshine Act. Officials said it is the largest Sunshine Act recovery since the law was passed in 2010.

Acting Deputy Inspector General for Investigations Miranda L. Bennett of HHS-OIG said the kickback scheme undermined trust in the health care system. Veloxis also entered into a five-year Corporate Integrity Agreement requiring an enhanced compliance program and an independent expert’s review of its effectiveness. The company received cooperation and remediation credit for admitting liability, disclosing evidence not previously known to the government, facilitating interviews and evidence collection, terminating employees responsible for the misconduct and strengthening its compliance policies and procedures, among other actions.

The settlement also resolves certain claims brought through a whistleblower lawsuit, United States ex rel. Toulsor1, Inc. v. Veloxis Pharmaceuticals A/S, et al., No. 1:20-cv-11575, filed in Massachusetts federal court.

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