Johnson & Johnson, Janssen and Omnicare: Rebates, Missing Data and Nursing-Home Prescriptions

Johnson & Johnson and Janssen agreed to pay $149 million to resolve the Omnicare fraud case over alleged kickbacks for nursing-home drug recommendations. The alleged arrangement reached into the medication review itself, where consultant pharmacists recommended what doctors should prescribe to residents.

Janssen Pharmaceuticals is a Johnson & Johnson subsidiary. Omnicare dispensed drugs to nursing-home patients and had consultant pharmacists who reviewed their care. The government alleged that manufacturer payments in nursing homes bought promotion of Risperdal and other Johnson & Johnson drugs through that clinical role.

The government’s earlier complaint named Johnson & Johnson and its subsidiaries Ortho-McNeil-Janssen Pharmaceuticals Inc. and Johnson & Johnson Health Care Systems Inc. It alleged that they paid Omnicare to purchase and recommend their drugs.

How the Payments Reached the Medication Review

Omnicare’s consultant pharmacists reviewed residents’ charts at least monthly and recommended drugs to their physicians. According to the Justice Department’s January 2010 account of its complaint, Johnson & Johnson knew physicians accepted those recommendations more than 80 percent of the time.

A recommendation delivered during a resident’s medication review could do the work of a sales visit. The government alleged that Johnson & Johnson viewed the pharmacists as an extension of its sales force, even though they presented their recommendations as independent clinical judgment.

The alleged arrangement used Omnicare’s hundreds of consultant pharmacists to promote the manufacturer’s drugs through active intervention programs.

Rebates, Data Purchases and Educational Funding

The government alleged that Johnson & Johnson paid Omnicare through rebates, data-purchase agreements, grants and educational funding. Each label described a different transaction, but the alleged purpose was the same: get the pharmacy to purchase and recommend the manufacturer’s drugs.

The rebate agreements allegedly entitled Omnicare to increasing rebates if it implemented specific programs to increase prescriptions. The benefit depended on the pharmacy undertaking the promotional work. That makes the program terms as revealing as the rebate schedule.

The data payments were especially telling. The government alleged that Johnson & Johnson paid millions of dollars for data, much of which Omnicare never supplied. According to the complaint account, those payments actually bought drug recommendations. A data contract is a curious explanation for payments when much of the data never arrives.

In the alleged bargain, residents lost independent advice about their medicines, and taxpayers paid for prescriptions steered by the manufacturer’s money.

Grants and educational funding allegedly served the same purpose. In that account, the clinical program was part of the sales arrangement, and the education budget was another way to pay for it. The relevant question inside the business is what the payment required Omnicare to do.

The Pharmacy Contract and the Government Claim

The government’s claim was that the manufacturer’s kickbacks caused Omnicare to submit false claims to federal health care programs. That connects the purchasing agreement to the prescription and ultimately to the public money paying for the drug.

Examining the drug claim alone would miss the alleged bargain behind the recommendation. The commercial agreement and the clinical decision belong in the same inquiry.

What Evidence Is Needed to Prove Fraud?

We work with insiders to connect rebate terms and intervention-program instructions to medication reviews, physician orders, dispensing records and government claims, showing how a commercial agreement reached a resident’s prescription.

For a data-purchase arrangement, we examine the agreement, invoices and delivery records together. The government’s allegation here makes the gap concrete: the pharmacy allegedly received payment for data it largely did not provide. For an educational payment, the program materials and recommendation records may show whose drug the program was intended to promote.

A contracting employee may know why an agreement changed. A consultant pharmacist may know how a clinical program changed the recommendations. A pharmacy billing employee may see the resulting claims. Our work is to connect those views into evidence of the payment scheme, with the insider’s knowledge explaining what the paperwork meant in practice.

The Same Pressure Behind Aranesp Drug Switches

The separate Omnicare and Amgen Aranesp case alleged that manufacturer rebates encouraged the pharmacy to switch residents between competing drugs. The whistleblower’s complaint described the consequences at the nursing home:

That is a separate allegation about different drugs, but it makes the same conflict visible. The pharmacy’s financial benefit could point one way while the nursing home’s view of the resident’s care pointed another. A drug-switch instruction can carry a rebate negotiation into the treatment record.

Janssen’s Own Nursing-Home Sales Campaign

In a separate civil complaint, the government alleged that Janssen used an ElderCare sales force from 1999 through 2005 to market Risperdal for behavioral disturbances in dementia patients. That team targeted nursing homes and doctors who treated the elderly. The government also alleged that Janssen downplayed increased stroke risks in elderly patients.

The pharmacy arrangement supplied another route to the prescriber. According to the government, the manufacturer wanted Omnicare’s consultant pharmacists to promote its drugs while presenting their recommendations as independent clinical judgment. One approach came through the manufacturer’s sales staff, the other through the resident’s medication review.

The Settlement Payments and Compliance Agreement

The Justice Department announced the pharmacy settlement on November 4, 2013. Johnson & Johnson and Janssen’s payment allocated $132 million to the federal government and $17 million to five participating states. Omnicare had already paid $98 million in its separate 2009 pharmacy resolution, which covered its alleged acceptance of Johnson & Johnson payments and other conduct.

The broader resolution also required Johnson & Johnson to operate under a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. It required annual compliance reports and certifications, transparency about research and physician payments, and changes allowing the company to recover bonuses and other incentives from executives tied to significant misconduct.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In this resolution, the Justice Department announced a $27.7 million reward for the District of Massachusetts whistleblowers, from the federal share of the civil settlement.

Whistleblowers started the pharmacy case, and the government joined it.

You Know What the Pharmacy Was Paid to Promote

If you know how a rebate, data contract or education budget changed nursing-home drug recommendations, talk with our whistleblower experts about what you saw. We build the case with you and bring in pharmaceutical fraud whistleblower lawyers who understand manufacturer payments and pharmacy prescribing programs. We stay beside you as the contracts, clinical records and claims become a case for recovering public money.