Omnicare agrees to $98 million settlement

Omnicare finalized an agreement to pay the federal government and several states $98 million to settle a variety of kickback allegations made by whistle-blowers under the False Claims Act and pursued by the U.S. Justice Department.

Omnicare, a Covington, Ky.-based company that provides pharmaceutical services for nursing homes, denies the contentions in the lawsuits, and does not admit any liability in the settlement agreement.

In one scheme, according to the Justice Department, Omnicare allegedly solicited and received kickbacks from Johnson & Johnson to recommend that physicians prescribe the antipsychotic Risperdal. The payments came in the form of data purchases, rebates, educational grants and fees to attend Omnicare meetings, the Justice Department said.

The government also alleged that Omnicare solicited an $8 million kickback from drugmaker IVAX Pharmaceuticals, now a unit of Teva Pharmaceuticals, in exchange for an agreement for Omnicare to buy $50 million worth of IVAX products. IVAX agreed to pay $14 million in a settlement but did not admit wrongdoing. "Ivax denies any liability relating to the contract at issue, which was executed years before Ivax was acquired by Teva," said spokewoman Denise Bradley in an e-email. "However, to avoid the uncertainty and expense of litigation, Ivax decided to settle and put the matter to rest."

In another alleged scheme, Omnicare is said to have paid $50 million for a small business unit of Mariner Health Care to keep the nursing-home chain as a customer. The government continues to pursue the case against the parties on the other side of the deal, which according to the complaint was solicited in order to help finance the 2004 acquisition of Mariner by National Senior Care (formed by investors for the transaction) and the creation of SavaSeniorCare. The lawsuit also names their principals, Leonard Grunstein, Murray Forman and Rubin Schron.

What do you think? Post a comment on this article and share your opinion with other readers. Submit your comments to Modern Healthcare Online at [email protected]. Please be sure to include your hometown and state, along with your organization and title.