Consumer Fraud

PharMerica Pays $9.25 Million to Settle Whistleblowers’ Kickback Allegations

whistleblower 3 370x210 PharMerica Pays $9.25 Million to Settle Whistleblowers Kickback AllegationsPharMerica Corp., the second-largest nursing home pharmacy, will pay $9.25 million to settle allegations stemming from a whistleblower lawsuit that it received generous kickbacks from Abbott Laboratories in exchange for pushing its anti-epileptic drug Depakote on nursing home patients.

Nursing homes depend on pharmacy consultants and managers, such as those who work for PharMerica, to review the medical charts of resident patients once a month or more to make recommendations to physicians about what drugs should be prescribed for those residents.

The settlement announced the U.S. Justice Department Oct. 7 resolves allegations that PharMerica sought and received illegal kickbacks from Abbott for recommending that nursing home patients take Depakote. The kickbacks were disguised as rebates, educational grants, and other financial support, the Justice Department alleged.

The agreement also resolves PharMerica’s part in a broader, global civil and criminal resolution that Abbott reached with the U.S. government and several states in May 2012. That $1.5-billion agreement stemmed from a False Claims Act case brought by whistleblowers claiming that Abbot was paying kickbacks to pharmacy management companies, including PharMerica, for prescribing Depakote to nursing home patients.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of health care professionals for their daily care,” said Assistant Attorney General Benjamin Mizer, head of the Justice Department’s Civil Division. “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Approximately $6.75 million of the settlement will go to the U.S. government, while $2.5 million will cover Medicaid claims by states that elect to participate in the settlement.

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees. Mr. Spetter and Ms. McCoyd filed their complaints under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  Ms. McCoyd will receive $1 million as her award. Mr. Spetter’s share has not yet been determined.

Source: U.S. Department of Justice