October 21, 2016

DOJ Catch of the Week — Omnicare, Inc.

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Omnicare, Inc.  On Monday, the Ohio-based nursing home pharmacy, the largest in the country, agreed to pay roughly $28 million to resolve charges of violating the False Claims Act by soliciting and receiving kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug, Depakote, for nursing home patients.  CVS Health Corporation acquired Omnicare last year, about six years after Omnicare ended the alleged misconduct.

According to the government, Omnicare disguised the kickbacks it received from Abbott in several ways.  One of them was through supposed “grants” and “educational funding” through Omnicare’s “Re*View” program.  Omnicare claimed the program was a health management and educational program but the government described it as simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers to use their drugs on elderly nursing home residents.  The government also pointed to alleged agreements with Abbott under which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.  Finally, the government claimed Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management and made other payments to local Omnicare pharmacies.

In May 2012, Abbott agreed to pay $1.5 billion to resolve Abbott’s liability under the False Claims Act for, among other things, alleged kickbacks to nursing home pharmacies, including Omnicare and PharMerica Corp.  In October 2015, PharMerica agreed to pay $9.25 million to settle its role in the alleged scheme.  The current settlement resolves Omnicare’s role in the alleged kickback scheme.  In announcing the settlement, the government stressed the importance of healthcare professionals using independent medical judgment, particularly with elderly patients.  DOJ Civil Chief Benjamin Mizer explained:

Every day, elderly nursing home residents suffering from dementia rely on the independent judgment of our nation’s healthcare professionals for their personal care and their medical treatment.  . . .   Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.

US Attorney John Fishwick, Jr. echoed this sentiment, noting how the settlement “ensures that some of the most vulnerable amongst us, those suffering from dementia, are provided with the level of care they deserve, . . . with the confidence that medical decisions are being made with the interests of the patient in mind, not big drug companies.”

This allegations underlying this settlement as well as the prior Abbott and PharMerica settlements originated in two whistleblower lawsuits filed by former Abbott employees Richard Spetter and Meredith McCoyd under the qui tam provisions of the False Claims Act.  Ms. McCoyd will receive a whistleblower award of $3 million from the proceeds of this settlement.

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