Drug recalled by a Miami man's dying company that faced Medicaid fraud charges
Nostrum Laboratories, which recalled 1 gram Sulcralfate Tablets on Friday, is in Kansas City at 1800 N. Topping Ave. Online county property records say Nostrom's founder and CEO, Nirmal Mulye, lives in a $5 million, 4,600-square-foot condo on Miami's Biscayne Boulevard.
Mulye's LinkedIn profile says he's got other jobs with Nostrum's 'family of pharmaceutical and energy companies.'
No operational employees have jobs at Nostrum Laboratories — they all were fired after the company filed for bankruptcy on Sept. 30, 2024. No employees means no one is in quality control.
So, Nostrum's recall notice said, the company can't 'assure that this product meets the identity, strength, quality, and purity characteristics that it is purported or represented to possess. While specific risks to patients from use of an adulterated product cannot always be identified or assessed, it is also not possible to rule out patient risks resulting from the use of such a product.'
In short, Nostrum can't guarantee that the Sulcralfate will work as it should and isn't contaminated.
The National Library of Medicine says Sulcrafate is for 'short-term treatment (up to 8 weeks) of an active duodenal ulcer' or 'maintenance therapy for duodenal ulcer patients at reduced dosage after healing of acute ulcers.'
This involves 1 gram Sulcralfate Tablets in 100-count or 500-count bottles, all lots, made by Nostrum after June 2023. Nostrum's notice tells wholesalers and distributors to destroy the tablets and that 'Nostrum Labs is not accepting any returns of this product.'
Customers should contact the prescribing medical professional or their pharmacist for different treatment options. If Sulcrafate users suffer a medical problem, notify a medical professional then notify the FDA's MedWatch Adverse Event reporting program.
Direct questions about the recall to Nostrum at recallcoordinator@nostrumlabsrecall.com.
Drug prices and Medicaid
Mulye jumped into the national drug cost discussion for a time in 2018 after being quoted in a Financial Times article justifying a 400% increase in a urinary tract infection drug. Clarifying his statement to CNBC, Mulye pointed the finger at the FDA for overregulation and inefficiencies that created the mise en scène for actions of Martin Shkreli, the drug executive who jacked up the price of one drug 5000% in 2015.
READ MORE: CEO who hiked drug price 400% fires back at U.S. Senator, says he got death threats
In 2023, the U.S. Justice Department charged Nostrum and Mulye with intentionally underpaying Medicaid rebates concerning the drug nitrofurantonin or Nitro OS.
As explained by the Justice Department, drugmakers 'pay quarterly rebates to state Medicaid programs in exchange for Medicaid's coverage of the manufacturers' drugs. The (Medicaid Drug Rebate Program) requires manufacturers to pay inflation-based rebates for drugs,' to protect the Medicaid programs from major jumps in drug price.
The rebates are determined by the drug's current price and the price when that dosage form and strength was first marketed.
Nostrum took Nitro OS off the market in January 2018 to comply with new FDA guidelines, then relaunched it in August 2018. Nostrum admitted it did so without changes in dosage form and strength to Nitro OS.
Same drug, new price — from $474.75 to $2,392.32 per bottle. That meant Nostrum should pay larger Medicaid rebates, but Nostrum admits it didn't from the last quarter of 2018 through the first quarter of 2020.
The minimum Nostrum would pay in the settlement, Justice said, was $3,825,000, and the most would be $50 million.
'Nostrum Laboratories reduced the amount that it paid to the Medicaid program by improperly calculating the rebates it owed, even after hiking the cost of one of their drugs by over 400%,' said FBI Boston Field Office Special Agent in Charge Jodi Cohen.
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