Nursing Home Pharmacy Settles Kickback ChargesNov 5, 2009 | Parker Waichman LLP
Drug giant Johnson & Johnson (J&J) continues to make news with a Justice Department investigation into accusations of Medicaid Fraud, announced Business Week. The Justice Department recently settled with Omnicare over kickback allegations to the tune of $112 million.
The massive settlement concerned kickbacks involving the United States’ biggest nursing home pharmacy, Omnicare and generic drug maker IVAX Pharmaceuticals and is just a part of a larger probe into potential Medicaid fraud by Big Pharma, said Business Week. Some feel the investigation focuses on industry paying consumer drug providers for special treatment, according to Business Week. The profits are believed to compromise patient care and increase costs.
The settlement that involves Omnicare and IVAX, a Teva Pharmaceutical Industries subsidiary, might drive criticism of the recent Obama Administration deal with Big Pharma hoped to help with health care reform, said Business Week. Opposing democrats feel larger cost savings should have been sought, Business Week added.
Omnicare will pay $98 million—and interest—to the federal government and some state Medicaid programs; IVAX will pay $14 million and interest. The agreement will settle claims that Omnicare, with IVAX, J&J, and two nursing home chains, were involved in kickbacks, said Business Week. The “Corporate Integrity Agreements” involve no admission of wrongdoing and include training and revised policies, reported Business Week.
The J&J probe continues, said Business Week. We wrote earlier this year that J&J was accused of defrauding Medicare and other federal health programs and that drug makers collected hundreds of millions of dollars in reimbursements for unapproved uses of the cardiac medication, Natrecor. According to J&J, it acknowledged receipt of a subpoena in 2005 in which the government sought paperwork on eight medications sold to Omnicare, said Business Week.
Taxpayers Against Fraud spokesman Patrick Burns, said the Justice Department is swamped with such fraud cases and drug manufacturers sell many similar medications; kickbacks are offer “a market edge,” reported Business Week. "In the pharmaceutical industry, the business isn't selling the best drug, it's the best scheme of kickbacks to the prescriber. Omnicare is just one of their sales points," quoted Business Week. "Patients have a right to depend on the integrity of the medical advice they're getting," said Tony West, assistant attorney general in the civil division at the Justice Department. "When kickbacks are involved, the medical judgment of the provider is corrupted," added West, quoted Business Week.
Omnicare has a long history of alleged fraud and civil fraud complaint settlements that include, for example, said Business Week, receiving $8 million in payments from IVAX (2000-04) to purchase $50 million in generic medications and recommending doctors prescribe the drugs to their nursing home patients; of accepting J&J payments (1999 to 2004) to forcefully urge the prescription of anti-psychotic, Risperdal, while discouraging other medications; purportedly paying $50 million to Mariner Health Care and SavaSeniorCare (2004) to continue to refer Medicaid and Medicare patients to for drug services; and allegedly offering nursing home discounts on drug consultations (2005-8) in exchange for more costly services. Omnicare paid $102 million (2006) to settle Medicaid fraud cases in 43 states, and was required to enter a five-year corporate integrity agreement, Business Week added.
Last December’s government filing named Omnicare and other key drug makers, said Business Week, and alleges that for a period of some eight years, executives at Omnicare pushed drug staffers to switch brand-name drugs in nursing homes for rebates, regardless of prescriptions written for other medications, without advising doctors of the switches, and by providing “misleading information” drug costs and benefits.