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Omnicare coughs up $98 million for kickbacks

December 1, 2009
by root
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Heard at 2009 AAHSA Annual Meeting & Exposition, November 8-11, Chicago

“You're this close to failing everyday … (Caregivers) go in every day because someone else might fail.” AAHSA President/CEO Larry Minnix in his opening address.

“Older men in the U.S. have the highest risk of suicide, especially white men.” Jane Pearson, PhD, associate director for Preventive Interventions at the National Institute of Mental Health, during an educational session on elder suicides.

“Old age is a state of blessedness, a liberation where you give up anxiety and self-consciousness.” Garrison Keillor, AAHSA keynote speaker, noting that caregivers help elders reach that “state of blessedness.”

Omnicare Inc., the nation's largest nursing home pharmacy, conceded in a settlement with the U.S. Department of Justice (DOJ) to pay $98 million to resolve allegations that the company engaged in several kickback schemes. Approximately $68.5 million of the settlement proceeds will go to the United States, while $43.5 million has been allocated to cover Medicaid program claims by participating states.

According to the DOJ, Omnicare allegedly solicited and received kickbacks from pharmaceutical manufacturer Johnson & Johnson (J&J) in exchange for agreeing to recommend that physicians prescribe Risperdal, a J&J antipsychotic drug, to nursing home patients. J&J's kickbacks to Omnicare took multiple forms, including rebates that were conditioned on Omnicare engaging in an “Active Intervention Program” for Risperdal and payments disguised as data purchase fees, educational grants, and fees to attend Omnicare meetings.

Also, Omnicare regularly paid kickbacks to nursing homes by providing consultant pharmacist services at rates below the company's cost-and below fair market value for such services-in order to induce the homes to refer their patients to Omnicare for pharmacy services, the government alleged.

“These defendants broke the law to take advantage of our nation's most vulnerable citizens-the elderly and the poor,” said Tony West, assistant attorney general for the Civil Division of the Department of Justice.

In addition to these allegations, the government filed a complaint against two Atlanta-based nursing home chains, Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, for accepting a kickback from Omnicare in return for pharmacy services contracts.

The DOJ said Omnicare paid a $50 million kickback to the chains, which was disguised as a purchase of a small business unit of Mariner that had only two employees and was worth far less than the money offered.

On the same day that Omnicare allegedly paid Mariner $50 million for this business unit-which had only $2 million to $3 million in assets-Mariner signed a 15-year contract with Omnicare to refer all of its nursing home patients to Omnicare for the patients' drug purchases, including those covered by Medicare and Medicaid.

After they became aware of the government's investigation, the leaders of the two nursing home chains allegedly created backdated documents in a further attempt to hide the kickback.

“This was a sophisticated kickback scheme,” said Tim McCormack, a Phillips & Cohen lawyer in Washington. “The companies tried to mask the payment through the use of numerous shell companies and complicated ownership structures.”

The U.S. Department of Health and Human Services will establish the nation's first national resource center to assist lesbian, gay, bisexual, and transgender elders

Journal of the American Geriatrics Society published a study that found elders with dementia have a 50% higher rate of death from the flu than those without dementia

Long-Term Living 2009 December;58(12):12

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