Dive Brief:
- The Securities and Exchange Commission has settled charges that Adamis Pharmaceuticals and its former CFO, Robert Hopkins, engaged in a fraudulent scheme to generate revenues using illegal prescriptions, the agency said Tuesday.
- Adamis, now known as DMK Pharmaceuticals, and Hopkins generated a “material percentage” of the company's revenues from 2016 to 2021 through illegal prescriptions written by a veterinarian who was compensated under a sham consulting agreement, the SEC said in a Tuesday order.
- As part of the settlement, the company agreed to “cease-and-desist” the alleged misconduct and to pay $334,314 in disgorgement penalties and prejudgment interest, according to the order. Hopkins is barred under the order from serving as an officer of a public company or practicing before the SEC as an accountant.
Dive Insight:
Adamis, which was a specialty biopharmaceutical company, merged with DMK Pharmaceuticals, a privately held company, in 2023 and the name of the surviving publicly traded firm was changed to DMK Pharmaceuticals. The company filed for bankruptcy last year.
According to the commission’s order, Adamis generated revenues from illegal conduct during the period beginning with its acquisition of US Compounding in April 2016, until US Compounding stopped doing business at the end of October 2021.
US Compounding sales representatives improperly submitted some orders for animal medications that falsely listed a veterinarian as the prescribing doctor, the SEC said. The veterinarian was allegedly paid kickbacks disguised as “consulting payments” that were falsely recorded as legitimate.
Hopkins, on behalf of Adamis, entered an agreement allowing the veterinarian to be paid monthly based on an hourly consulting rate of $100, while in fact the veterinarian’s monthly fee was based on an oral side agreement that he would be paid a 10% commission on the illegal prescriptions, the agency said.
The SEC didn’t immediately respond to a request for comment. A DMK spokesperson could not immediately be reached for comment.
