Second-largest pharmacy operator in settlement negotiations for two federal fraud lawsuits

The second-largest pharmacy operator in the nation has agreed to settle two federal fraud lawsuits that allege the company illegally pushed anti-seizure medication and potentially addictive Schedule II drugs to nursing home patients, according to the Kentucky Center for Investigative Reporting (KYCIR). The terms and amount of each settlement have not yet been disclosed.

The two lawsuits were brought separately in Virginia and Wisconsin against Louisville-based PharMerica Corp., which operates 98 pharmacies across 45 states. The company identifies itself as a "leader in long-term care pharmacy service."

The Virginia lawsuit stems from a whistleblower claim that PharMerica took kickbacks from Abbott Laboratories Inc. in exchange for promoting Depakote to dementia patients. The drug was approved  by the FDA for seizures and bipolar disorder. In 2012, Abbott settled claims of off-label use for $1.5 billion, according to the Department of Justice (DOJ).

The complaint also alleges that PharMerica, along with Omnicare Inc., falsely billed federal and state healthcare programs, collecting hundreds of millions in reimbursements. Between 1998 and 2008, Medicaid spent approximately $3.5 billion on Depakote for long-term care patients, 85 to 90 percent of which was off-label. Omnicare also is being sued by the DOJ--and on Tuesday, Kentucky joined the multistate lawsuit that alleged the company submitted $6 billion in false claims to the state's Medicaid program and received "millions in kickbacks," according to a second KYCIR article.

Meanwhile, the DOJ intervened in the Wisconsin case in 2013, four years after whistleblowers originally filed the case. Federal prosecutors accused PharMerica of dispensing Schedule II drugs such as oxycodone and fentanyl to nursing home residents in non-emergency situations without obtaining a written prescription from a physician.

PharMerica has denied any wrongdoing, but the government said that an internal audit found that only one of its pharmacies followed the correct prescription procedure, according to KYCIR. In September, a federal judge denied PharMerica's motion to dismiss three of the government's claims, according to Law 360.

The pharmaceutical industry has developed a reputation for multi-million dollar settlements linked to allegations of fraud, kickbacks and off-label usage. Last month, AstraZeneca paid $7.9 million to kickback allegations. In January, Daiichi Sankyo settled kickback allegations for $39 million.

 For more:
- read the first and second KYCIR articles

Suggested Articles

The HHS OIG is asking for an additional $23.7 million to support fraud oversight that has benefited from an emphasis on data analytics.

A New York surgeon was sentenced to 13 years in prison for fraud and more physician practice news from around the web.

A federal judge has ruled that the U.S. government’s remaining fraud case against UnitedHealth can move forward.