Veloxis Pharmaceuticals Agrees to Pay Over $46 Million to Resolve Criminal and Civil Kickback Allegations

Veloxis Pharmaceuticals Inc., a North Carolina-based drug manufacturer, has agreed to pay more than $46 million to resolve criminal and civil allegations that it paid illegal kickbacks to induce prescriptions of Envarsus XR, a kidney transplant immunosuppression drug. The resolution includes a deferred prosecution agreement filed in the District of Massachusetts charging the company with conspiracy to violate the federal Anti-Kickback Statute. Veloxis will pay a criminal penalty exceeding $10 million.

According to admissions and court documents, from October 2016 through June 2023, Veloxis engaged in an aggressive marketing scheme to gain market share for Envarsus against a cheaper generic competitor. The company provided transplant healthcare providers with lavish dinners, expensive trips, luxury resort stays, gifts, and alcohol under the guise of advisory boards. Veloxis also made purported consulting payments to providers for work that was never performed. Employees falsified expense reports to conceal the kickbacks, including by omitting physicians’ names to avoid Sunshine Act reporting requirements.

Veloxis additionally paid kickbacks to specialty pharmacies disguised as enhanced services payments to induce them to purchase Envarsus. The civil settlement resolves False Claims Act allegations that Veloxis caused false claims to be submitted to Medicare, Medicaid, and TRICARE. The company will pay $34.45 million to the United States and certain states, plus a $1.55 million civil penalty to CMS for knowingly failing to report physician payments under the Open Payments Program. This represents the largest Sunshine Act recovery since the law was passed in 2010. The case included claims brought under the qui tam whistleblower provisions of the False Claims Act. This case reflects the government’s aggressive pursuit of healthcare fraud and its commitment to holding pharmaceutical manufacturers accountable when they prioritize profits over patient care and taxpayer dollars.