NAMFCU announced that a $9.8 million settlement with Medicis Pharmaceutical Corporation of Scottsdale, Ariz., was reached, 48 states, the District of Columbia and the federal government participated in the settlement. The agreement with Medicis resolves allegations that the company promoted the use of a topical skin preparation, Loprox, for use on children under the age of 10, without approval by the Food & Drug Administration (FDA). The settlement also resolves claims brought by four former Medicis sales representatives in the federal District Court of Kansas.

The participating states and the federal government alleged that from approximately November 2001 through April 2004, sales representatives at Medicis targeted pediatricians, urging the doctors to use Loprox as a treatment for diaper rash. The use of Loprox, which is approved by FDA as a fungicide for patients over 10 years of age, is not a "medically accepted indication" for the treatment of diaper dermatitis and other skin disorders in children under 10. As a result of this "off-label" promotion by Medicis, state Medicaid programs paid millions of dollars for Loprox prescriptions that would not have been reimbursed if government authorities had known that the prescriptions resulted from such a marketing campaign.

As part of the settlement, Medicis entered into a Corporate Integrity Agreement with the United States Department of Health and Human Services’ Inspector General. The agreement will include provisions that Medicis will implement an internal Code of Conduct to ensure that it will market, sell, promote, research, develop and advertise its products in accordance with all Federal health care program and FDA requirements.

The National Association of Medicaid Fraud Control Units conducted the settlement negotiations on behalf of the states, with representatives of the Ohio, Illinois and New York Medicaid Fraud Control Units leading the effort.

(Date: December 2007)