The sordid past continues to haunt KV Pharmaceutical. The controversial little drugmaker has now agreed to pay $17 million to resolve allegations that a defunct subsidiary violated the False Claims Act by failing to advise the Centers for Medicare and Medicaid Services that two of its drugs were unapproved and, therefore, did not qualify for coverage.

The move comes just seven months after Marc Hermelin, the former KV chairman and ceo, pleaded guilty to presiding over the production and distribution of oversized morphine sulfate tablets. As a result, he was ordered to pay a $1 million fine and was banned from participating in federal health care programs, such as Medicare and Medicaid (back story).

Ethex allegedly submitted false quarterly reports to the government concerning Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules. As a result, the feds contended Ethex knowingly caused false claims to be submitted. Neither drug ever received FDA approval; they are no longer on the market. The lawsuit was brought by a whistleblower against various drugmakers (here is the Justice Department statement, the lawsuit and the KV statement).

These events, however, occurred under earlier ownership. Since the Hermelin clan moved on, however, KV has continued to generate controversy. The drugmaker, you may recall, earlier this year won FDA approval under the Orphan Drug Act for Makena, a form of progesterone that, for many years, was offered by compounding pharmacies. But KV was battered by pricing gouging charges for asking $1,500, compared with $10 to $20 a week for compounded versions.

The drugmaker subsequently lowered the price, but not before engendering a lot of ill will. The FDA, however, has since agreed to investigate the source various compounded versions that apparently raised concerns about the quality of the active pharmaceutical ingredients and compounded products. KV commissioned research into the compounded meds and turned that info over to the FDA (back story).

pic thx to katerha on flickr