On December 22, the United States filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received kickbacks from Abbott Laboratories in exchange for purchasing and recommending Depakote, a dementia drug for elderly patients. Omnicare is the nation’s largest provider of pharmacy dispensing services to nursing homes, and also provides consulting services to the homes. According to the complaint, Omnicare “wielded enormous influence over the drugs administered to the residents of Omnicare-serviced nursing homes.” The U.S. alleges that “in exchange for Abbott’s kickbacks, Omnicare engaged in intensive efforts to convince nursing home physicians to prescribe Depakote, and its claims to federal healthcare programs for prescriptions of Depakote increased from less than $3 million in 1998 to over $92 million in 2008.”
Background
The Centers for Medicare and Medicaid Services (CMS) has issued regulations to ensure that nursing home residents are “free from unnecessary drugs,” including antipsychotic drugs used in excessive amounts, for excessive duration, without adequate monitoring, or in the presence of adverse consequences indicating that the dose should be reduced or discontinued. Nursing homes must ensure that the drugs are “necessary to treat a specific condition as diagnosed and documented in the clinical record” and that residents “receive gradual dose reductions, and behavioral interventions, unless clinically contraindicated in an effort to discontinue these drugs.”
To comply with these requirements, nursing homes arrange for a consultant
pharmacist to review the medications of each resident. During the course of these reviews, the consultant pharmacists make recommendations to remove, change, or add medications to the nursing home residents’ drug regimens. The defendant in this case, Omnicare, employed consultant pharmacists to make recommendations to physicians about the drugs they should prescribe for nursing home residents.
Allegations
According to the complaint, Omnicare’s consultants recommended Depakote to help control aggressive behavior in dementia patients, and collected kickbacks from Abbott in return. Omnicare allegedly entered into agreements with Abbott to recommend Depakote over competitor drugs in exchange for “rebates” and other payments. “These payments undermined the independence of the consulting pharmacists and subverted their role of ensuring that nursing homes complied with [ ] regulations such that they, in fact, became an extension of the drug manufacturers’ sales forces,” the complaint alleges.
The complaint uses a number of examples to connect Abbot’s payments and rebates with specific Depakote sales targets. In a PowerPoint presentation describing contract terms, for instance, Abbott allegedly emphasized that rebate payments were contingent on meeting the threshold increases: “Rebates paid on total Depakote sales ONLY after achieving growth tiers.”
Omnicare also allegedly received annual educational grants, as well as money for data relating to sales of Depakote from Abbot. Omnicare allegedly solicited $50,000 to support a program called “Re*View,” which the government claims did not exist. The complaint states that Omnicare internal documents referred to Re*View as the “one extra script per patient” program.
The U.S. concludes: “As a result of kickbacks paid by Abbott, Omnicare purchased, ordered, or recommended or arranged for the purchasing or ordering of Depakote, in violation of the federal anti-kickback statute…all of the claims Omnicare presented to Medicaid and Medicare for Depakote are false or fraudulent.”
“Accordingly, Omnicare knowingly presented or caused to be presented false or fraudulent claims for payment or approval in violation of [the False Claims Act].”
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The allegations in this case are similar to a number of recent DOJ lawsuits. In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies. In 2013, as part of Johnson and Johnson’s $2.2 billion settlement, Omnicare was implicated in a similar nursing home kickback arrangement.
Here, the United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia. The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery. The United States is entitled to intervene and take over such lawsuits, as it did here.
We will follow the case as it progresses down the line.