At least $68 billion is lost every year to health care fraud—and that is considered to be a conservative estimate. Most would agree that we need to crack down hard on those who cheat the system. That’s certainly how I believe most Americans feel. Based on what I have learned in litigation, the drug industry is one of the worst corporate offenders ever. But there are certainly others who apparently believe cheating the federal and state governments is OK.
Omnicare Inc., the nation’s largest pharmacy for nursing homes, agreed to pay the federal government and several states $98 million to resolve allegations that they were involved in a fraudulent kickback scheme with nursing homes and drug manufacturers. According to the federal government, Omnicare allegedly “solicited and received” kickbacks from healthcare giant Johnson & Johnson in exchange for “agreeing to recommend that physicians prescribe” the company’s anti-psychotic drug, Risperdal. The government reported that the payments to Johnson & Johnson were disguised as data fees, educational grants, and fees to attend Omnicare meetings. However, Johnson & Johnson was not the only player in this fraud game.
The government alleged that Omnicare also solicited and received $8 million in kickbacks from drug manufacturer IVAX (a unit of Teva Pharmaceutical Industries Ltd.) in exchange for Omnicare’s agreement to purchase $50 million in drugs from IVAX. Omnicare allegedly also paid kickbacks to nursing home chains—in one case shelling out $50 million to just two of these chains.
The Justice Department stated that Omnicare’s alleged actions with both Johnson & Johnson and IVAX caused false claims to be submitted to Medicare, Medicaid, and other federal healthcare programs. Assistant Attorney General Tony West stated that “these Defendants broke the law to take advantage of our nation’s most vulnerable citizens—the elderly and the poor.” He went on to say:
Illegal conduct like this can undermine the medical judgments of healthcare professionals, lead to patients being prescribed medications they do not need, and drive up the costs of healthcare.
This Omnicare case originated with five lawsuits filed by individuals who reported the alleged false claims to the government. Johnson & Johnson was served with two whistleblower lawsuits in April that were connected to its conduct with Omnicare. The Justice Department said that it expects to make a decision soon as to whether it will intervene in the lawsuits against Johnson & Johnson. As far as IVAX is concerned, the Justice Department reported that IVAX will pay $14 million to settle allegations of its behavior in this kickback scheme.
As you are probably aware, many states and the Department of Justice have sued J&J, Ivax, and other pharmaceutical companies for making false claims to State Medicaid programs. This newest scheme to defraud Medicare and Medicaid – by providing illegal kickbacks to Omnicare – appears be just another example of big pharmaceutical companies cheating the system in order to inflate their profits with taxpayer dollars. As counsel for seven state Medicaid programs in the AWP litigation, our firm is working to reign in these pharmaceutical giants who apparently believe that they just don’t have to follow the rules like everyone else. If you need additional information on this matter contact Clay Barnett at 800-898-2034 or by email Clay.Barnett@beasleyllen.com.
Sources: The Associated Press, CBS Evening News, and Wall Street Journal
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