The Bigger They Are….False Claims Act Settlement Involving Nation’s Largest Nursing Home Pharmacy Nets Feds $112 Million

The largest nursing home pharmacy in the country, Omnicare Inc. of Covington, Kentucky, will pay $98 million, and drug manufacturer IVAX Pharmaceuticals of Weston, Florida, will pay $14 million to resolve allegations that Omnicare engaged in kickback schemes with several parties, including IVAX, the federal government announced today. Approximately $68.5 million of the settlement proceeds will go to the United States, while $43.5 million has been allocated to cover Medicaid program claims by participating states. 

The settlement with Omnicare – the nation’s largest pharmacy that specializes in providing drugs to nursing home patients – resolves allegations that the company solicited or paid a variety of kickbacks. The company allegedly solicited and received kickbacks from a pharmaceutical manufacturer, Johnson & Johnson (J&J), in exchange for agreeing to recommend that physicians prescribe Risperdal, a J&J antipsychotic drug, to nursing home patients. According to the government, J&J’s kickbacks to Omnicare took multiple forms, including rebates that were conditioned on Omnicare engaging in an "Active Intervention Program" for Risperdal and payments disguised as data purchase fees, educational grants, and fees to attend Omnicare meetings. The government further alleged that Omnicare regularly paid kickbacks to nursing homes by providing consultant pharmacist services at rates below the company’s cost and below the fair market value of such services in order to induce the homes to refer their patients to Omnicare for pharmacy services. The government also alleged that Omnicare solicited, and IVAX paid, $8 million in kickbacks in exchange for Omnicare’s agreement to purchase $50 million in drugs from IVAX. These allegations against Omnicare and IVAX, now a subsidiary of Teva Pharmaceuticals Industries, Ltd., are detailed in a complaint unsealed today and originally filed under the qui tam or whistleblower provisions of the False Claims Act in a federal district court in Massachusetts.
 
As part of the settlement, Omnicare and IVAX have agreed to enter into separate corporate integrity agreements with the Office of Inspector General of the Department of Health and Human Services. Those agreements provide for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to these matters.