Home » KyCir: PharMerica pays $9.2M to settle health care fraud suit

KyCir: PharMerica pays $9.2M to settle health care fraud suit

This article was produced by the Kentucky Center for Investigative Reporting, a nonprofit newsroom based in Louisville, Ky. 

Jeffersontown, Ky. – PharMerica Corp., the Jeffersontown-based supplier of drugs to nursing homes, has agreed to pay $9.25 million to settle civil claims that it took kickbacks to boost sales of an anti-seizure drug.

The money will be paid to the U.S. government, two whistleblowers and most states, including Kentucky, whose attorney general, Jack Conway, said it will receive $27,838. 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.

“This case highlights mismanagement of medical care for the nation’s elderly,” said Washington, D.C., attorney Reuben Guttman, who represented whistleblower Meredith McCoyd, a former Abbott Labs sales representative. “It is really a case about paying to put drugs in the bodies of patients who were without the ability to engage in informed consent.”

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.

(Read our investigation “The Kickback, Fraud and Drug-Switch Claims That Ail a Louisville Pharmacy Company”)

Abbott Labs settled its part of the case in 2012 by paying $1.5 billion in fines and forfeitures to the government, states and whistleblowers. Omnicare, a drug distributor that moved its headquarters from Covington to Cincinnati in 2011, remains a defendant in the case.

PharMerica is the 10th-biggest publicly traded company in Kentucky, with $1.9 billion in annual revenue. The company confirmed the settlement Wednesday in a press release, although it denied the allegations.

Pharmerica“PharMerica is pleased to resolve this matter and is committed to compliance and the highest standards of ethical conduct,” the company said in a statement. “PharMerica remains focused on operating with integrity and delivering industry-leading performance.”

Conway’s office also confirmed the settlement.

“Reckless promotion of drugs resulting in false claims to state and national health care programs is unacceptable,” Conway said in a statement. “Drug companies that exploit Kentucky taxpayers through improper and deceptive marketing practices will face the consequences.”

This year has been a busy one for PharMerica’s lawyers. In May, the company agreed to pay $31.5 million to settle federal claims that it dispensed addictive painkillers to nursing home patients without prescriptions and defrauded Medicare. In August, it agreed to settle whistleblower charges that it took kickbacks from Amgen Inc. to switch nursing home patients with anemia from Johnson & Johnson’s Procrit to Amgen’s Aranesp. Terms have not yet been disclosed.