Drug Company and CEO Settle $47M False Claims Allegations Over Kickbacks and Free Tests

A pharmaceutical company, QOL Medical, and its chief executive officer, Frederick Cooper, have agreed to pay $47 million to resolve allegations of kickbacks and false claims brought forth by whistleblowers, according to the U.S. Department of Justice (DOJ).

The settlement stems from accusations that the company offered free tests and promoted false claims in connection with its drug Sucraid, used to treat a rare sugar-digestion disorder.

The U.S. Department of Health and Human Services (HHS), which oversees federal health programs like Medicare and Medicaid, prohibits offering free goods or services to patients or doctors if those offerings could influence the use of a specific drug or medical service. The HHS considers such actions kickbacks, which can lead to false claims when related bills are submitted to federal health programs.

QOL Medical and Cooper allegedly violated the False Claims Act by providing free breath test kits between May 1, 2018, and June 30, 2022. These kits were used to screen for Congenital Sucrase-Isomaltase Deficiency (CSID), a rare condition in which patients cannot properly digest table sugar. The DOJ stated that these tests, approved and distributed with Cooper’s consent, were inaccurate, with approximately 30% of patients testing positive. The disease itself affects only a very small number of individuals worldwide.

The DOJ detailed that QOL distributed the free test kits to healthcare providers to identify patients with symptoms suggestive of CSID. Alongside the test results, QOL collected data on the providers, patients’ symptoms, age, and gender. This information was then handed to the company’s sales team, who were instructed to contact the providers and promote Sucraid prescriptions. Training materials reviewed by the DOJ revealed that sales representatives were taught to inform providers that “if a patient had a positive breath test, they wouldn’t improve unless they were treated with Sucraid.”

“QOL provided free goods to doctors and patients in order to induce prescriptions for the very expensive drug QOL manufactured,” said Joshua Levy, acting U.S. Attorney for the District of Massachusetts, in a press release.

The DOJ also accused QOL of causing healthcare providers to submit false claims to Medicare, Medicaid, and other federal programs for the tests and Sucraid. These claims were deemed fraudulent due to the kickbacks and the promotion of inaccurate testing.

Under the settlement, QOL and Cooper agreed to enter a corporate integrity agreement with the HHS Office of the Inspector General. Details of the agreement were not immediately disclosed.

Of the $47 million settlement, $43.6 million will go to the federal government, with $21.8 million earmarked as restitution. An additional $3.3 million will be paid to states with Medicaid programs, including $1.7 million in restitution.

The case, originally initiated by four whistleblowers who were former employees of QOL, was filed under United States ex rel. John Doe 1 et al. v. QOL Medical LLC, et al. (D. Mass., No. 1:20-cv-11243). As part of the resolution, the whistleblowers will collectively receive about $8 million.

In response to inquiries, QOL Medical was not immediately available for comment.

By fLEXI tEAM