Kaleo: The Pharmacies Behind the Evzio Claims

Kaleo agreed to pay $12.743 million in the Evzio prior authorization settlement over allegations that it steered prescriptions to pharmacies submitting false claims and provided kickbacks to prescribers. The alleged arrangement connected the sales representative in the doctor’s office with the pharmacy getting the prescription covered. Someone who knew how that handoff worked could see more than either company’s paperwork showed alone.

The Department of Justice announced the settlement on November 9, 2021. This pharmaceutical fraud case began with a whistleblower’s qui tam case. The complaint came from a former Kaléo marketing representative who described both the sales practices and conversations with pharmacies about how they secured coverage.

Evzio and the Price of Coverage

Evzio was Kaléo’s naloxone hydrochloride product for rapidly reversing an opioid overdose. The government described it as the highest-priced naloxone version on the market and said insurers frequently required prior authorization before approving coverage.

The amended complaint alleged that Evzio’s price rose from $690 per package when marketed in 2014 to a list price of $4,500 in early 2017. The whistleblower also alleged that pharmacies benefited from a larger gap between their acquisition cost and Medicare reimbursement after the increase.

In the drug business, a formulary determines which products a plan covers and on what terms. Prior authorization puts a further question between prescribing and payment: does this patient meet the plan’s requirements? Kaléo’s case concerns what the manufacturer allegedly did to send prescriptions to pharmacies that could get through that gate, and what those pharmacies told the payer.

How Preferred Pharmacies Got the Prescriptions

The government alleged that, from March 14, 2017 through April 30, 2020, Kaléo directed doctors to send Evzio prescriptions to preferred pharmacies. Those pharmacies allegedly submitted false claims to Medicare, TRICARE and the Federal Employees Health Benefits Program, using false or misleading prior authorizations and dispensing without collecting or trying to collect government beneficiaries’ copays.

The complaint describes how prescriptions reached that network. According to the whistleblower, marketing representatives encouraged doctors to issue blanket standing orders for all their Medicare patients receiving opioid pain treatment. The offices then supplied patient lists and contact information to network pharmacies:

The pharmacy’s next jobs, the complaint alleged, were to contact the patient, obtain approval where required, dispense Evzio and submit the Medicare claim. The sales work extended into the office’s patient list, while the coverage work moved to the pharmacy.

Access to that business allegedly influenced prescribing itself. The complaint says certain Physician Partners of America doctors held ownership interests in Patient Rx Solutions Pharmacy, LLC and refused to prescribe Evzio until Kaléo included the pharmacy in its network. Once it did, the doctors began prescribing. Their ownership interest allegedly let them profit from the prescriptions they wrote.

That is why pharmacy referrals can carry their own financial incentive. In this allegation, the thing the physicians wanted was a place for their pharmacy in the manufacturer’s network.

The Patient on the Authorization Form

The Evzio complaint alleged that some plans required visual impairment or a medical reason the patient could not use less expensive naloxone products. Other criteria concerned a particular diagnosis or a history of drug abuse or overdose. The form needed facts about the patient to explain why the plan should cover this product.

The whistleblower described asking how pharmacies were securing approvals when patients did not meet the requirements. One pharmacy’s explanation was that the information was proprietary. Other conversations allegedly revealed a more direct answer:

In that account, taxpayers were billed for an expensive overdose drug on the strength of a made-up medical need.

A 2020 University of Portsmouth doctoral study of U.S. pharmacists’ decisions examined that pressure through a hypothetical prior-authorization scenario. It reported that 28.2% of respondents would complete the form, including signing the physician’s name. The study explains the operational tension: authorization can stop a prescription at dispensing, while the prescriber holds the medical history needed to answer the coverage questions.

The complaint also alleged pressure to generate replacement prescriptions. Beginning in January 2017, representatives allegedly encouraged doctors to prescribe the newly released 2 mg Evzio version to Medicare patients who still possessed unexpired, usable .4 mg devices. That allegation connects the new prescription to what the patient already had at home.

What Is a Pharmaceutical Kickback?

A pharmaceutical kickback can be a benefit provided to induce or reward prescribing. In Kaléo’s case, the government alleged frequent deliveries of food and beverages to doctors’ offices, plus occasional holiday gifts for prescribers and office staff, even without an educational or other business event.

The alleged benefit did not require a speaker’s podium or a consulting contract. It arrived at the office. The government said the purpose was to induce and reward Evzio prescriptions, putting the office benefits alongside the pharmacy-routing allegations in the same settlement.

Are Pharmaceutical Companies Liable for False Claims?

A pharmaceutical company can face a False Claims Act case for causing false claims that a pharmacy submits. Here, the government alleged that Kaléo knew of, or deliberately ignored, pharmacy misconduct and kept directing business to those pharmacies. The allegation connected knowledge inside the manufacturer to the next prescription it sent.

The civil allegations against Insys concerned speaker bribes, medically unnecessary Subsys prescriptions and false reimbursement submissions. The common point is the connection between generating prescriptions and getting the resulting claims paid. Kaléo’s alleged role centered on directing business to the pharmacies doing that work.

Solera’s Separate Evzio Settlement

The Solera Specialty Pharmacy civil resolution, announced July 13, 2022, set a separate $1.31 million payment by the pharmacy and its chief executive. It concerned allegedly false Evzio prior authorizations, including unsupported clinical information.

What the Sales and Pharmacy Records Can Show

We trace a case from the prescription’s origin to the government’s payment. A sales employee may know why a particular pharmacy received the business. A pharmacy employee may know who supplied the patient history, who completed the authorization and whether anyone pursued the copay. The complaint’s account came from a marketing representative whose work brought those conversations together.

We connect that knowledge to the records: referral instructions and network decisions, the clinical information behind an authorization, the request sent to the payer and the resulting claim. Standing-order communications can show how patients entered the process. Pharmacy dispensing and copay records can show what happened after approval. The point is to connect the commercial decision with the healthcare claim it produced.

The Whistleblower Case Behind the Settlement

The government said Kaléo’s settlement resolved allegations originally brought under the qui tam provisions of the False Claims Act. The former marketing representative’s complaint shows the value of knowing both the sales message and what pharmacies said about getting claims approved. That is a useful vantage point in a health care business where different companies perform different parts of the same transaction.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Prescription Got Approved

If you worked in sales, patient access or a pharmacy and saw the gap between a patient’s history and the story sent to the payer, talk with our whistleblower experts about what you saw. We build the case with you, bring in pharmaceutical fraud whistleblower lawyers who understand prior authorizations and pharmacy referrals, and stay beside you as we pursue your strongest pharmaceutical whistleblower case.