The Louisville, Kentucky-based PharMerica, the nation’s second-largest nursing home pharmacy, agreed on October 7 to pay $9.25 million to settle allegations it took kickbacks in exchange for promoting a specific drug to nursing home patients. Judge Joseph Anderson Jr. of the U.S. District Court for the District of South Carolina was confident enough in preliminary terms to dismiss the lawsuit without prejudice in mid-August, after the sides had reported a settlement.
This settlement comes on the heels of a $31 million dollar settlement earlier this year. That settlement, made in May, was a resolution to a lawsuit filed by the United States that alleged PharMerica violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare. According to that complaint, PharMerica’s actions enabled nursing home staff to order narcotics, and enable pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident.
The government alleged that PharMerica’s consultant pharmacists recommended nursing home physicians prescribe Depakote, an anti-epileptic medication made by Abbott Laboratories, in exchange for kickbacks from the drugmaker. The government alleged the kickbacks took the form of rebates, educational grants and other financial support. Abbott already agreed in 2012 to pay $1.5 billion to settle the related allegations against it—the second-largest settlement by a drug company at the time.
PharMerica was accused of defrauding Medicare, Medicaid the other federal health care programs by accepting the Abbott Laboratories’ kickbacks and filing false reimbursement claims from 2001 through 2008.The lawsuits were originally brought by two whistle-blowers, former Abbott employees Richard Spetter and Meredith McCoyd. The lawsuits were filed 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. According to the 2007 complaint, filed in federal court in Roanoke, Va., Abbott Labs promoted its drug Depakote for medical uses other than those approved by the Food and Drug Administration. Depakote had been approved to treat epileptic seizures and manic episodes and prevent migraine headaches. The suit claimed that PharMerica went along with Abbott Labs’ program of giving the drug to dementia patients who had become agitated or aggressive.
Under the False Claims Act, whistle-blowers are entitled to a portion of any money the government is able to recover in such cases. McCoyd will receive $1 million from the settlement. Also, $2.5 million of the settlement will go toward Medicaid program claims by states that choose 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.
U.S. Attorney Anthony P. Giorno said the PharMerica settlement should serve as a reminder to pharmaceutical companies and their clients that their activities are being monitored. “We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs,” Giorno said. 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 Deputy Assistant Attorney General Benjamin C. Mizer, head of the U.S. 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.”