PharMerica: The Margin Behind the Drug Switch

In the PharMerica Aranesp fraud case, the pharmacy agreed to pay $2.5 million over allegations of improper promotion of Amgen’s anemia drug. The whistleblower’s complaint described a pharmacy business turning manufacturer rebates into pressure to switch nursing-home patients from Procrit to Aranesp. It connected the money to physician calls, medication reviews and employee bonuses. For someone inside that business, the question was what the pharmacy wanted the prescription to earn.

The Department of Justice announced the settlement on December 23, 2015. PharMerica served hundreds of nursing homes nationwide. The whistleblower came from the manufacturer: an Amgen employee who, according to the complaint, had directed its long-term-care and home-health-care division and managed the Aranesp sales team.

How PharMerica’s Aranesp Rebates Encouraged Drug Switches

The complaint alleged that PharMerica’s therapeutic-interchange program pushed switches from Procrit to Aranesp to increase prescriptions and earn manufacturer rebates. It described those rebates as kickbacks for influencing drug selection. Its account of PharMerica’s contracts describes a concrete incentive: in 2007, the pharmacy could earn a 20% discount by purchasing more than $5,200,000 of Aranesp during the specified contract periods. The complaint said Amgen calculated the rebates quarterly and paid them in a lump sum.

That purchase target reached into the clinical program. The complaint described a management presentation seeking conversion of all Procrit patients to Aranesp, and a mandatory teleconference for pharmacy managers and lead consultants. The complaint quoted a PharMerica memorandum that made the financial objective explicit:

In the complaint’s account, dispensing pharmacists and consultant pharmacists worked toward the same financial goal. The quoted memo pitched lower costs to customers and a higher margin for the pharmacy. The resident’s prescription was how both were supposed to happen.

The whistleblower also challenged the clinical reason for switching everyone. The complaint identified Aranesp’s approved uses as anemia associated with chronic renal failure or chemotherapy, and alleged that the blanket conversion plan encouraged prescribing outside those uses. It said the memorandum named no medical or health benefit for patients making the switch.

The Clinical HUB Took the Switch to Physicians

PharMerica allegedly used a Houston call center called the Clinical HUB to encourage physicians to switch patients from Procrit to Aranesp. According to the complaint, nurses and other healthcare professionals staffed it, making direct telephone solicitations and sending letters.

The complaint also described a template request asking physicians to discontinue Procrit and switch to Aranesp when the existing supply ran out. Pharmacists in a regional pilot program allegedly called physicians themselves. The alleged sales effort reached physicians from both the call center and the pharmacies working with their facilities.

Medication Reviews Fed the Bonus Scorecard

Monthly drug-regimen reviews gave the alleged program a recurring opportunity to reach the attending physician. The whistleblower alleged that Amgen and the pharmacy companies used those reviews to promote switches to Aranesp. According to the complaint, PharMerica’s regional scorecards tracked therapeutic-interchange success and helped determine employee bonuses.

The alleged promotional support reached the people around the prescription, too. At PharMerica’s request, the complaint said, Amgen funded messaging to nursing-home physicians, consultant pharmacists and nurse administrative coordinators. The alleged arrangement gave employees a financial reason to turn manufacturer-funded promotion into drug recommendations.

Why the Nursing-Home Pharmacy’s Position Mattered

A nursing-home pharmacy can supply the medicine and employ the consultant pharmacist who recommends changes to it. That combination was central to the complaint: PharMerica allegedly used its consultant pharmacists’ access to physicians to carry out the rebate-driven switching program.

The payment arrangement matters as well. Under Medicare’s skilled nursing facility consolidated billing rules, the Part A payment generally bundles drugs with the facility’s other covered services. Medicare pays the facility, and the facility’s contract determines what it pays an outside supplier.

The Aranesp complaint alleged that the switching arrangements also reached prescriptions reimbursable by Medicare and Medicaid. It claimed the companies knew their promotion would affect residents covered by government health care programs. That is the connection between a pharmacy’s purchasing deal and the taxpayers paying for the resulting prescriptions.

The Aranesp Settlements Followed the Companies

The Justice Department described PharMerica’s settlement as the final part of the Aranesp litigation. Amgen had settled for $24.9 million in 2013. Omnicare followed with $4.19 million in 2014. The government joined the Amgen and Omnicare portions, while the whistleblower pursued the PharMerica case on the government’s behalf.

The department reported a combined government recovery of just over $31.5 million across the series.

The Business Records Behind the Aranesp Allegations

The Aranesp complaint tied the manufacturer’s payment terms to drug recommendations through ordinary business records. It described rebate schedules setting the purchase incentive, presentations and training materials turning that incentive into instructions, and physician request forms carrying the proposed switch. The regional scorecard allegation connected conversion results to employee bonuses.

Those documents gave the whistleblower’s account a path from the purchasing department to the resident’s prescription. The complaint then connected the switches to drugs reimbursable by government programs.

The complaint’s detail came from someone who had managed the manufacturer’s sales team. A pharmacy employee may see the same arrangement from another position: the instruction sent to consultants, the request sent to physicians or the bonus attached to conversion results. Our work is to connect that view to the contract and payment decisions behind it.

The Pharmacy Pattern Beyond Aranesp

PharMerica’s separate Depakote settlement involved a similar alleged route into prescribing. The pharmacy agreed to pay $9.25 million over allegations that it accepted rebates, educational grants and other financial support from Abbott to recommend Depakote to nursing-home residents. Consultant pharmacists’ monthly medication reviews again supplied the channel. The recurring concern is manufacturer money shaping recommendations presented through the pharmacy’s clinical staff.

A different PharMerica pharmacy-discount case alleged that below-cost Part A drugs bought access to more profitable Part D and Medicaid business. That allegation put the incentive in the deal with the nursing home. The Aranesp allegations put it in the manufacturer’s deal with the pharmacy.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay the whistleblower 15% to 30% of what the government recovers.

You Saw What Drove the Switch

If your work put you inside the rebate negotiations, consultant-pharmacist instructions or bonus decisions, talk with our whistleblower experts about the drug switches you saw. We build the case with you and bring in pharmacy fraud whistleblower lawyers who understand how manufacturer payments reach prescribing decisions. We stay beside you through the pursuit of a recovery.