Amgen: Rebates for Switching Patients to Aranesp

In the Amgen Aranesp settlement, the company agreed to pay $24.9 million over alleged pharmaceutical kickbacks to pharmacies for programs designed to switch Medicare and Medicaid beneficiaries from a competing anemia drug to Aranesp. The alleged payments rewarded market share or volume. For someone who worked on a pharmacy contract, a rebate calculation or a nursing-home drug recommendation, that is the connection worth following: what the manufacturer paid for, and whose treatment the payment was meant to change.

The Justice Department announced this pharmaceutical fraud settlement on April 16, 2013. The alleged arrangement put the pharmacy’s financial reward into decisions about patients’ medicine, with Medicare and Medicaid paying the claims.

What Therapeutic Interchange Bought

Therapeutic interchange in the Amgen Aranesp settlement meant programs designed to switch beneficiaries from a competing anemia drug to Aranesp.

In Amgen’s case, the government alleged that the manufacturer paid Omnicare, PharMerica and Kindred Healthcare, all long-term-care pharmacy providers, to implement programs designed to move beneficiaries to Aranesp. Consultant pharmacists and nursing-home staff were the audience for materials promoting the drug.

The manufacturer was allegedly paying for influence over a decision inside the care facility. A rebate calculation at the pharmacy and a drug recommendation at the nursing home were parts of the same alleged sales program.

Why the Rebate Was Tied to Market Share

Performance rebates can pay more as a drug gains business. In this case, the government alleged that Amgen tied its rebates to market-share or volume thresholds.

The 2004 American Journal of Health-System Pharmacy commentary Examining the Value of Pharmacy Benefit Management Companies distinguishes a flat rebate, paid at the same percentage across market-share levels, from a performance rebate:

The paper’s account of pharmacy benefit managers’ contracts shows the incentive to move business. In the alleged Aranesp arrangement, the payment terms and the switching program explain each other. A rebate schedule can show what drug use the manufacturer wanted to reward.

Rebates sit inside the broader business of manufacturer payments for drug access and utilization. A rebate can arrive after the purchase, under terms fixed at the initial sale. The invoice and the rebate agreement therefore tell different parts of what the customer paid and what it could receive back.

A separate Amgen whistleblower complaint described a hospital rebate program built around market-share growth:

The Materials Sent Into Nursing Homes

The government also alleged that Amgen distributed materials encouraging Aranesp use in patients who did not have anemia associated with chronic renal failure. The intended readers were consultant pharmacists and nursing-home staff, and the Justice Department described the materials as part of the therapeutic-interchange program.

That patient-population allegation also touches off-label promotion and the resulting government claims. Here, the practical connection is specific: the same alleged program combined pharmacy payments with materials encouraging broader Aranesp use. An insider familiar with those materials may understand what the rebate contract’s commercial language leaves unsaid.

Separate Settlements for Amgen and the Pharmacies

Amgen’s settlement addressed the alleged source of the kickbacks. Two smaller pharmacy settlements followed, addressing the alleged recipients.

Omnicare agreed to pay $4.19 million in a settlement announced on February 27, 2014. The government alleged that it solicited and received Amgen kickbacks for programs designed to switch Medicaid beneficiaries to Aranesp.

The Omnicare allegations also described payments beyond the performance rebates: grants, speaker fees, consulting services, data fees, dinners and travel. The alleged compensation appeared under several kinds of business spending, all tied in the government’s account to the switching arrangement.

PharMerica’s separate civil settlement was $2.5 million. The December 23, 2015 announcement reported a recovery of just over $31.5 million across the Amgen, Omnicare and PharMerica resolutions.

The manufacturer allegedly paid to gain business, while the pharmacy allegedly accepted compensation for moving it.

The Same Nursing-Home Channel in Another Case

Johnson & Johnson faced a separate civil case over alleged payments to Omnicare to influence nursing-home drug recommendations. In its November 2013 account of the Omnicare arrangement, the government described market-share rebates, data-purchase agreements, grants and educational funding intended to induce consultant pharmacists to promote Risperdal and other company drugs.

The government alleged that the pharmacists purported to give independent clinical recommendations while Johnson & Johnson viewed them as an extension of its sales force. That is the conflict the pharmacy channel can conceal. A recommendation reaches the nursing home through a healthcare professional, while the manufacturer has allegedly paid the professional’s employer to favor its drug. The Amgen case concerned a different drug and payment arrangement, but the institutional route is recognizable.

What Evidence Is Needed to Prove Fraud?

For a pharmacy-switching case, we look at what connects the manufacturer’s payment, the intended change in drug use and the government claims. Here, the alleged rebate thresholds, switching program and promotional materials show why those connections matter.

A contracting employee may understand what triggered a rebate. A consultant pharmacist may know how recommendations reached nursing-home staff. Someone working with reimbursement may see the prescriptions that reached Medicare or Medicaid. We work with insiders to connect those views of the transaction and explain what the payment bought.

The case against Amgen began with a whistleblower’s qui tam action in the U.S. District Court for the District of South Carolina. A manufacturer can influence drug selection while a pharmacy or provider sends the bill to the government. Under the False Claims Act, the company behind a false bill can be held responsible along with the company that sends it.

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

You Know What the Pharmacy Was Paid to Change

If you know the rebate terms or promotional materials behind a pharmacy’s drug recommendations, speak with our whistleblower experts about what the pharmacy was paid to change. We work with you to build your strongest pharmaceutical whistleblower case and bring in pharmaceutical fraud whistleblower lawyers who understand manufacturer payments and pharmacy operations. We stay beside you as the contract terms, internal decisions and health care claims become the case for recovery.