Cypress Pharma Settles Marketing Case For $2.8M

The government alleges that a Cypress subsidiary falsely claimed that three skin products carried the FDA's "safe and effective" designation.

BEAUMONT, Texas (AP) — A Mississippi-based pharmaceutical company has agreed to pay $2.8 million to resolve civil allegations that the manufacturer falsely marketed skin products to receive government funding.

U.S. Attorney John M. Bales said Wednesday that Cypress Pharmaceutical Inc., a subsidiary and CEO Max Draughn will pay $1.6 million to the military's TRICARE program and $1.2 million to state Medicaid programs.

The government alleges that Cypress subsidiary Hawthorne Pharmaceuticals Inc. claimed that three skin products carried the Food and Drug Administration's "safe and effective" designation when the treatments didn't. The government also claims the regulatory status of the products was misrepresented.

Bales says a whistleblower who sued under the False Claims Act received $300,000 as part of the settlement.

An official for Madison, Miss.-based Cypress didn't immediately return a phone call seeking comment.

More in Operations