Omnicare, which is the nation’s largest nursing home pharmacy, agreed on Monday to pay more than $28 million to resolve charges of seeking kickbacks from Abbott Laboratories (ABT) in exchange for boosting prescriptions for a medicine that the drug maker had promoted illegally.
As part of the scheme, Omnicare disguised the kickbacks from Abbott as grants and educational funding, and took rebates from the drug maker based on the amount of Depakote that was prescribed for each nursing home resident. In addition, Abbott paid for Omnicare management meetings at a Florida resort and offered tickets to sporting events, according to the US Department of Justice.
The arrangement between Omnicare and Abbott began after the drug maker launched a new initiative in 1997 to boost prescriptions for the drug, which is approved for treating seizures, bipolar mania, and migraines, but not uncontrollable behavior due to dementia. The following year, Omnicare began soliciting kickbacks from Abbott and the scheme lasted about three years, according to court documents.
The settlement is the latest in a long-running probe by the feds into Omnicare, which is now owned by CVS (CVS), and the interplay between nursing home pharmacies and drug makers.
In 2012, Abbott reached a $1.5 billion global civil and criminal settlement that resolved, among other things, alleged kickbacks paid to nursing home pharmacies. At the time of the agreement, the feds noted that Abbott promoted Depakote for controlling behavioral disturbances in dementia patients, even though the US Food and Drug Administration never approved the pill for this particular use.
“Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs,” said Benjamin Mizer, the principal deputy assistant attorney general in the Justice Department’s Civil Division, in a statement announcing the settlement with Omnicare.
The arrangements between nursing home pharmacies and pharmaceutical companies provided both with irresistible economic incentives, according to Reuben Guttman, an attorney for Meredith McCoyd, a former Abbott sales representative. She filed a whistleblower lawsuit that the federal government later joined and which led to Monday’s settlement agreement. And she will receive $3 million, before attorney fees, for her trouble.
By persuading nursing home doctors to prescribe their pills, drug makers tap into a large market for their medicines. And nursing homes were able to cut back on staffing by giving medications that would make patients more compliant, he explained. In this instance, Depakote was prescribed for bipolar mania. “They both saw it as a win-win,” he said.
In 2009, Omnicare also paid $98 million to resolve charges of paying kickbacks to Johnson & Johnson (JNJ) and IVAX, a company now owned by Teva Pharmaceutical, for boosting the use of some of their drugs. J&J later paid $149 million for inducing Omnicare to prescribe its Risperdal antipsychotic as part of a broader $2.2 billion settlement regarding off-label marketing and kickback charges.
Another nursing home pharmacy, PharMerica, has paid millions in fines to settle allegations brought by the federal government for defrauding Medicaid, dispensing painkillers without prescriptions and paying kickbacks to win nursing home business, as noted by the Kentucky Center for Investigate Journalism.