Pharmaceutical company QOL Medical LLC and its CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they illegally used kickbacks to promote their drug Sucraid, a treatment for a rare digestive disorder. The settlement, announced by the U.S. Department of Justice, resolves claims that QOL offered free Carbon-13 breath tests to healthcare providers to induce false claims for the drug under federal health programs, violating the False Claims Act.
Sucraid is an FDA-approved drug for treating Congenital Sucrase-Isomaltase Deficiency (CSID), a rare genetic disorder that impairs the digestion of sucrose. However, starting in 2018, QOL Medical and Cooper allegedly engaged in a scheme where they distributed free Carbon-13 breath test kits to doctors, claiming the test could diagnose CSID. In reality, the test did not specifically diagnose CSID and could yield false positives for conditions unrelated to the disorder. Despite this, QOL used the test results to target healthcare providers, encouraging them to prescribe Sucraid to patients who tested positive for low sucrase activity.
The scheme continued for several years, with QOL paying a laboratory to analyze the breath tests and share the results with both doctors and QOL’s sales force. QOL tracked whether a positive breath test led to a prescription for Sucraid, and sales representatives were instructed to use the test results to make sales calls to providers. In some cases, QOL sales representatives falsely claimed that a positive test result indicated the necessity of treating the patient with Sucraid.
As part of the settlement, QOL Medical and Cooper have admitted to certain facts supporting the government’s case. The company’s actions allegedly led to improper payments under Medicare, Medicaid, and other federal healthcare programs, wasting taxpayer dollars and potentially influencing doctors’ treatment decisions.
“Participants in the federal healthcare system, including pharmaceutical manufacturers, may not offer improper inducements to generate business,” said Brian M. Boynton, Principal Deputy Assistant Attorney General. “The department is committed to protecting the integrity of federal healthcare programs and ensuring physicians’ decisions are free from improper influence.”
In addition to the monetary settlement, the case highlights the broader issue of kickback schemes that undermine trust in the healthcare system. Acting U.S. Attorney Joshua S. Levy noted, “Not all kickbacks come in the form of cash. Here, QOL relied on free breath tests and misleading sales tactics to push their product, draining money from federal healthcare programs.”
The settlement also includes a significant recovery for state Medicaid programs, totaling approximately $3.4 million. The whistleblowers who exposed the scheme—former QOL employees—will receive about $8 million as part of the federal portion of the recovery.
Federal authorities, including the Department of Health and Human Services Office of Inspector General (HHS-OIG) and the FBI, emphasized their commitment to rooting out fraud and protecting taxpayer-funded healthcare programs.
This settlement marks the resolution of a lawsuit originally filed under the False Claims Act by former QOL employees. It sends a strong message about the consequences of pharmaceutical companies using deceptive practices to promote their products at the expense of public health programs.
