On November 9, 2021, the United States Department of Justice (DOJ) announced a $12.7 million settlement with kaléo Inc., resolving allegations that kaléo caused false claims to be submitted to Medicare, TRICARE, and the FEHBP for its drug Evzio, an injectable form of naloxone hydrochloride indicated for use to reverse opioid overdose.
From October 2016 until September 2020, kaléo marketed and manufactured Evzio. Evzio was one of several commercially-available naloxone products indicated for use on an emergency basis for opioid overdoses. Evzio was the highest-priced version of naloxone on the market and insurers often required prior authorization requests before they would approve coverage for Evzio.
According to the DOJ, from March 14, 2017, to April 30, 2020, kaléo directed prescribers to send Evzio prescriptions to select preferred pharmacies, including Royal Care Pharmacy in VA, Benzer Pharmacy Holding LLC in Florida, Plymouth Towne Care Pharmacy (d/b/a People’s Drug Store) in Indiana, and Shaska Pharmacy LLC (d/b/a Ray’s Drugs) in Michigan.
The preferred pharmacies would then submit false prior authorization requests for the drug that misrepresented to insurers that the prescribing physicians submitted the request (when in reality, it was the pharmacy) and/or included false or misleading statements about the patients’ medical histories (such as false statements about previously trying and failing less costly alternatives to Evzio). The preferred pharmacies would also dispense Evzio without collecting or attempting to collect co-payment obligations from government beneficiaries.
The United States believes that kaléo knew of and/or deliberately ignored the misconduct by the select pharmacies and kept directing business their way.
The United States further alleged that kaléo gave illegal remuneration to prescribing physicians and their office staff in violation of the Anti-Kickback Statute to induce and reward their prescribing of Evzio.
The claims resolved in the settlement were initially brought by a former employee of kaléo who is eligible to receive more than $2.5 million of the settlement amount. As is often the case with settlements like this, the claims resolved by the settlement are only allegations and there has been no determination of liability.
“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.”
“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.”
Prior Concerns Over Price Hike
kaléo also came under fire in 2017 after it raised the price of Evzio by 550% in the middle of the opioid epidemic, to $4,500 for a twin-pack. At the time, 30 United States senators asked the company for information on its pricing structure for Evzio and why the company chose to adjust prices.
At the time, Spencer Williamson, CEO of kaléo, noted that Americans with commercial insurance were able to get Evzio for no out-of-pocket cost. Americans paying cash would pay $360, with an exception for low-income uninsured Americans, who were able to get it for no out-of-pocket cost.