A subsidiary of Nashville-based Caremark Rx agreed to pay nearly $138 million to settle kickback allegations with the U.S. attorney in Philadelphia and HHS' inspector general's office, the agencies announced today. AdvancePCS was charged in civil lawsuits filed by three whistle-blowers with soliciting and accepting kickbacks from prescription drug manufacturers to induce potential customers to contract with them. The whistle-blowers, former AdvancePCS employees, alleged the company accepted payments from drugmakers and disguised them as administrative fees in exchange for favorable treatment for those manufacturers' drugs in contracts with managed-care plans and other payers. "This settlement addresses AdvancePCS' hidden financial relationships with drug manufacturers and health plans that influence what drugs we are prescribed and how much we pay for them," said Patrick Meehan, the U.S. attorney in Philadelphia, in a news release.
In the 42-page consent order, AdvancePCS agreed to inform health plans about company business practices and disclose payments received from drugmakers for five years. The company also agreed it would not engage in drug-switching that results in health plans or covered beneficiaries paying more than the cost of the drug that doctors prescribed. In the 75-page settlement agreement, the company agreed not to engage in kickback arrangements. The whistle-blowers filed the lawsuits under the federal False Claims Act and similar state versions of the whistle-blower law in 11 states and the District of Columbia. Caremark said AdvancePCS settled without admitting wrongdoing and that the settlement resolves alleged conduct that occurred at AdvancePCS prior to its purchase of the company in March 2004. -- by Mark Taylor