Cardinal Health to pay $13M to settle kickback allegations

Cardinal Health will pay $13.1 million to settle allegations that it paid kickbacks to physicians to get them to purchase specialty drugs through Cardinal, the Justice Department announced Monday.

The Dublin, Ohio-based wholesale distributor allegedly gave doctors upfront cash discounts to use Cardinal for their pharmaceutical purchases, which violated the anti-kickback statutes, the DOJ said. Upfront rebates must be tied to specific purchases and should be clawed back if the buyer misses the quota, investigators warned, noting that Cardinal failed to follow those regulations.

"Cardinal Health thought it hit upon a surefire moneymaker by paying kickbacks to doctors, which cost health benefit programs millions of dollars in potentially fraudulent claims," Joseph Bonavolonta, special agent in charge of the Federal Bureau of Investigation's Boston division, said in a news release.

Cardinal no longer offers term-based, upfront discounts, the company said in a statement.

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"We have reached an agreement with the Department of Justice related to term-based, upfront discounts in historical customer contracts within Cardinal Health's specialty pharmaceutical distribution business and will resolve the matter with a settlement of approximately $13 million, without admitting liability," the organization said.

Cardinal's specialty pharmaceutical division will enter into a five-year corporate integrity agreement with the HHS' Office of Inspector General.

The settlement, which stemmed from a 2018 whistleblower lawsuit, amounts to 0.01% of Cardinal's $162.47 billion in 2021 revenue. Cardinal's pharmaceutical division generates most of the company's operating earnings, which totaled $472 million last year.