Drug manufacturer Veloxis Pharmaceuticals, Inc. agreed in August to pay more than $46 million to settle allegations that it paid kickbacks to drive prescriptions of its kidney transplant immunosuppression drug, Envarsus XR.[1] The resolution of this matter included a Sunshine Act penalty payment of $1.55 million—the largest ever recorded.[2] The settlement resulted from the U.S. Department of Justice’s newly created Task Force to Eliminate Fraud and its National Fraud Enforcement Division.[3]
This Veloxis settlement bears the hallmarks of other similar recent DOJ enforcement actions targeting pharmaceutical speaker programs and advisory boards.[4] These include what are now well-recognized “no-no’s” since the publication of guidance by the U.S. Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”), and a series of highly publicized DOJ prosecutions and settlements: inviting the spouses and guests of healthcare providers (“HCPs”) to programs, providing alcohol, hosting events at upscale hotels and restaurants in desirable destinations, and inviting prescribers to attend multiple presentations on the same topic. Red flags also include meal prices exceeding appropriately modest market prices, and sham payments to HCPs disguised as “consulting fees.”
Criminal Allegations
Under a Deferred Prosecution Agreement, Veloxis agreed to pay a criminal penalty of approximately $10 million.[5] As part of that agreement, Veloxis admitted to conspiring to violate the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b.[6] Envarsus was the only drug Veloxis made and sold, and it competed directly with a generic alternative.[7] The federal government alleged the object of the Veloxis scheme was to gain market share by bribing the HCPs best positioned to influence Envarsus’s placement on formularies and treatment protocols,[8] with a particular focus on HCPs serving on the Pharmacy and Therapeutics Committees of transplant centers and hospitals.[9]
According to DOJ, Veloxis hosted advisory board programs that included luxury resort stays for HCPs and their guests, along with lavish meals, alcohol, and direct payments to HCPs. From the federal government’s perspective, these benefits functioned as kickbacks designed to induce transplant HCPs to prescribe, order, or recommend or arrange for prescribing Envarsus.[10] DOJ also suggested the real purpose of the advisory board programs was not to educate other HCPs on the product, but to provide Veloxis with strategic advice on how to persuade insurers to cover and reimburse Envarsus.[11]
To conceal the conduct, Veloxis employees submitted falsified expense reports. Among other tactics, employees omitted attendee names to reduce per-head meal expense figures and omitted the names of physician attendees in an effort to avoid reporting their remuneration under the Sunshine Act.[12] The scheme spanned nearly six years.[13]
Civil Allegations
On the civil side, Veloxis agreed to pay a $34.45 million penalty to the United States and certain states to resolve False Claims Act (“FCA”) allegations arising from kickbacks paid to hospital personnel and specialty pharmacies nationwide.[14] With respect to specialty pharmacies, Veloxis allegedly paid kickbacks in the form of per-patient and per-month payments to induce the purchase of Envarsus over its cheaper generic competitor. Veloxis’s contracts with the specialty pharmacies characterized these payments as compensation for “enhanced services,” such as data collection and adherence support, but Veloxis paid thousands of dollars per month regardless of whether the specialty pharmacies actually provided those services.[15]
As part of the resolution, Veloxis entered into a five-year Corporate Integrity Agreement (“CIA”).[16] The CIA requires Veloxis to adopt new policies, procedures, and internal controls to improve its oversight and reporting of federal Anti-Kickback Statute violations.[17]
The Significance of Cooperation and the New FCA Pilot Program
Both the settlement and the DOJ’s public release emphasized Veloxis’s significant cooperation in the FCA case, which allowed the company to receive cooperation credit.[18] That cooperation included disclosing inculpatory evidence not previously known to the government,[19] facilitating interviews with current and former employees,[20] and collecting evidence from third parties.[21] Veloxis also fired the employees responsible for the misconduct,[22] terminated its relationships with involved third parties,[23] and engaged an expert to conduct a damages analysis.[24]
Thus, notwithstanding the settlement amount Veloxis paid, the outcome could have been substantially worse absent the company’s cooperation. This matter reflects that DOJ is serious about the “carrots” it is dangling for companies who cooperate with DOJ investigations, even without proactively bringing the misconduct to DOJ first. But for those who do initiate their own self-disclosures, the potential rewards are likely to be even greater under the joint DOJ-HHS pilot program for the self-disclosure of FCA violations announced on October 22, 2026.[25] As the press release states (as elaborated in the accompanying guidance):[26]
Participants must describe all relevant details relating to the disclosing company’s conduct that potentially violates the federal FCA and produce documents sufficient to fully reflect the nature, terms, and operation of the disclosed potential FCA violations. Self-disclosing companies must describe the remedial actions they have taken and make a financial repayment with a 1.25–1.6 multiplier. The multiplier applied will vary based on factors such as the timeliness of the self-disclosure, the duration and scope of the misconduct, the involvement of senior leadership, the financial benefit to the disclosing company, and whether the disclosing company has successor liability for the misconduct but promptly remediated. In exchange, companies will receive a coordinated civil release from liability under the federal [FCA]and certain HHS administrative authorities.
The potential for a relatively low multiplier, given exposure to as much as treble damages under the FCA, along with attorney’s fees, offers a particularly strong incentive for self-disclosure.
In sum, all companies should review the Veloxis settlement, particularly in light of the new FCA pilot program, as well as their engagements with prescribers to ensure their business interactions are compliant and will not warrant DOJ’s attention.
[1] U.S. Dep’t of Justice, Press Release, Veloxis Pharmaceuticals Agrees to Pay Over $46M to Resolve Criminal and Civil Liability for Kickbacks, https://www.justice.gov/opa/pr/veloxis-pharmaceuticals-agrees-pay-over-46m-resolve-criminal-and-civil-liability-kickback (last visited Oct. 27, 2026).
[2]Id.
[3]Id.
[4]See HHS-OIG, Special Fraud Alert: Speaker Programs, https://oig.hhs.gov/documents/special-fraud-alerts/865/SpecialFraudAlertSpeakerPrograms.pdf (Nov. 16, 2020) (describing fraud risks of pharmaceutical speaker programs)
[5] Veloxis Pharmaceuticals, Inc. Settlement and Deferred Prosecution Agreement at 1, https://www.justice.gov/usao-ma/media/1457221/dl?inline
[6]Id.
[7] Press Release, supra note 1.
[8] Press Release, supra note 1.
[9] Deferred Prosecution Agreement, supra note 5.
[10] Press Release, supra note 1.
[11] Deferred Prosecution Agreement, supra note 5.
[12] Press Release, supra note 1.
[13]Id.
[14]Id.
[15] Deferred Prosecution Agreement, supra note 5; Press Release, supra note 1.
[16] Press Release, supra note 1.
[17]Id.
[18]Id.
[19]Id.
[20]Id.
[21]Id.
[22]Id.
[23]Id.
[24] Deferred Prosecution Agreement, supra note 5.
[25] U.S. Dep’t of Justice, Press Release, Justice Department’s Civil Division and the Department of Health & Human Services Announce Anti-Fraud Healthcare Self-Disclosure Pilot Program, https://www.justice.gov/opa/pr/justice-departments-civil-division-and-department-health-human-services-announce-anti-fraud (last visited Oct. 27, 2026).
[26]See id.
