Omnicare to shell out another $28M on kickback litigation

Omnicare will pay more than $28 million to resolve allegations that the drug distributor accepted kickbacks for pushing an anti-seizure medication on doctors who treated patients in nursing homes.

The Department of Justice said Monday that the deal resolves claims that Omnicare sought and received the kickbacks from drugmaker Abbott Laboratories several years ago for sales of the drug Depakote. Omnicare runs the nation’s largest nursing home pharmacy and was purchased last year by drugstore giant CVS Health Corp.

The Justice Department says the kickbacks undermined the role of medical personnel in putting the health of patients first.

The kickbacks were disguised in a variety of ways, according to the Justice Department, including payments from Abbott that were described as “grants” and “educational funding.”

Neither CVS Health nor Abbott returned calls from The Associated Press immediately on Monday.

About $20.3 million from the settlement will go to the federal government. Former Abbott employee Meredith McCoyd will receive $3 million of that after filing a lawsuit under a whistleblower provision of the False Claims Act that permits individuals to sue on behalf of the federal government and then share in any recovery.

Approximately $7.8 million from the settlement will go to the state and federally funded Medicaid program, which covers nursing home care.

Omnicare, based in Woonsocket, Rhode Island, has spent hundreds of millions of dollars resolving kickback litigation in recent years. In 2014, it agreed to pay more than $124 million to settle lawsuits alleging it gave kickbacks to some facilities so they would keep the company as their drug provider for elderly Medicare and Medicaid recipients.

In 2009, Omnicare said it would pay $98 million to settle allegations that it solicited or paid a variety of kickbacks. That included an accusation that it received kickbacks from Johnson & Johnson for recommending that doctors prescribe to nursing home patients the antipsychotic Risperdal, which can hasten death in elderly people with dementia.

CVS representatives have referred to Omnicare’s previous resolutions as legacy issues.

CVS paid more than $10 billion for Omnicare to boost its fast-growing specialty drug business.

Shares of the nation’s second-largest drugstore chain dropped 2 per cent, or $1.78, to $87.02 in midday trading while broader indexes dipped slightly. Shares of Abbott, based in North Chicago, fell 7 cents to $40.72.