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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 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, 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 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.

  • As a hospice nurse I currently see patients in nursing homes who are prescribed Depakote for behavior. It is shameful how our elderly are treated with chemical restraints. There is no easy answer to the problems before us as our population continues to age, but educated caregivers who stand firm against the prevalence of prescribing pills to solve problems must come to an end. I believe in most cases we would all fare better if three or less medications was the the gold standard and GOAL compared to the three pages and average of ten to fifteen medications most of this vulnerable population are taking…including the number one, toxic, over the counter laxative Miralax which is known to cause possible neuropsychiatric events resulting in the need for drugs to treat behavior…no one ever stops to connect the dots.

  • Very few clean hands:

    1) The fact that Omnicare is a criminal enterprise masquerading as a geriatric pharmacy distributor has been known for 20 years.

    2) This settlement pales compared to the criminal fine that Lilly had to pay for promoting its “five at five”, which was another nursing home staff reduction program in which Lilly promoted that each patient receive 5 mg of Zyprexa at 5 PM in order to sedate them for the evening. (see link below)

    3) Not to excuse the nursing homes themselves, many have entered into a “partnership” program with Medicare to reduce use of neuroleptics such as Risperdal and Seroquel for agitation. For those who don’t know, Medicare rates nursing homes on a five star system, and getting five stars is the holy grail of the nursing home industry. Medicare, in public records has recently stated that the percentage of patients receiving antipsychotics will in the future be one of the major criteria by which the homes are rated, i.e, less neuroleptic use = more stars. Now the homes are forced to use rent-a-shrinks to scour the patient files on a quarterly basis and report back to Medicare on the percentages. So next time you walk into a nursing home and it sounds like a scene out of “Gothika” you’ll know why.

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