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Schwarz Pharma Pays Wisconsin Medicaid $164,000 to Settle Claims Based on FDA Violations


MADISON — Attorney General J.B. Van Hollen announced today that Wisconsin has received payment of $164,187.16 as its share of a settlement joined by other states and the federal government with pharmaceutical manufacturer Schwarz Pharma, Inc., and Schwarz Pharma Manufacturing, Inc., to settle allegations that the companies violated FDA regulations concerning the regulatory status of the drugs Deponit and Hyoscyamine Sulfate Extended Release and failed to notify the Centers for Medicare and Medicaid Services (CMS) that the drugs no longer qualified for coverage under Medicaid. Schwarz paid the states and the federal government a total of $22 million dollars in damages and penalties to compensate Medicaid and various federal healthcare programs for its conduct.


Medicaid is a health care program for the needy funded jointly by the state and federal governments. Of the total settlement, $304,916.33 was attributable to Wisconsin Medicaid comprising both the state and federal shares.


“The Medicaid system can only operate effectively if providers properly and transparently report the status of products that are covered for payment,” said Van Hollen. “My office will continue to work to make sure we have accountability for the use of hard-earned taxpayer dollars.”


Deponit is a nitroglycerin skin patch that has been used to prevent angina. Hyoscyamine Sulfate ER is an antispasmodic medication that has been used to treat various stomach, intestinal, and urinary tract disorders. While the active ingredients in Deponit and Hyoscyamine Sulfate ER had been in products on the market for many years, the Food and Drug Administration (FDA) made determinations in 1997 and 1999 that resulted in these drugs being ineligible for reimbursement by government health care programs such as Medicaid. The State and Federal government allege that Schwarz misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under the federal health care programs. As a result, the government contends, Schwarz knowingly caused false claims to be submitted for Deponit and Hyoscyamine Sulfate ER. At no time, did these drugs ever receive full regulatory approval for safety and effectiveness, and neither product is currently on the market.


This settlement is based on qui tam cases that were filed in the United States District Court for the Southern District of Texas and the United States District Court of Massachusetts by relators-private parties who filed actions under state and federal false claims statutes.