Long-Term-Care Pharmacy Kickbacks: Consultant Recommendations and Facility Discounts

Long term care pharmacy kickbacks can involve manufacturer payments for consultant recommendations, or discounts to nursing facilities in exchange for other reimbursed pharmacy business. One arrangement buys influence over which drug a resident receives. The other buys access to the facility’s prescription business by reducing costs the facility pays itself. If you work in consulting pharmacy, dispensing or facility finance, you may see the recommendation, the discount or the payment that connects the deal.

The nursing home, its pharmacy, the consultant pharmacist, the prescriber and the payer each have a different part in that story.

How Manufacturer Payments Reach the Consultant’s Recommendation

A consultant pharmacist can influence a resident’s prescriptions through medication review. A manufacturer payment tied to that influence can reach the prescribing decision through someone other than the prescriber.

Nursing facilities must provide or arrange routine and emergency drugs, pharmacist consultation and at least monthly medication-regimen review, including the resident’s chart. The nursing-facility pharmacy services requirements put that review inside the facility’s regular work. The prescriber orders the medicine. The dispensing pharmacy supplies it. The consultant reviews the regimen and can recommend changes to the attending physician.

That gives the consultant a recurring opportunity to influence product choice. Institutional pharmacy also involves separate facility drug-supply agreements, consultant agreements and payer or network terms. A manufacturer agreement can sit alongside those contracts and reward the pharmacy for purchases or recommendations. The question for an insider is what the manufacturer expected the pharmacy and its consultants to do in return.

The government’s earlier allegations against Omnicare included payments connected to Risperdal recommendations, data fees, educational and meeting fees, purchase commitments and below-cost consulting. Those arrangements appeared in the 2009 manufacturer-and-facility kickback resolution. The Risperdal allegations concerned Medicaid claims.

When a Drug Review Becomes a Sales Opportunity

The Aranesp whistleblower complaint describes how a manufacturer and long-term-care pharmacies allegedly turned consultant access into drug switching. The whistleblower had managed an Aranesp sales team and alleged direct knowledge of the rebate arrangements. The complaint reproduced an internal PharMerica memo:

The memo put pharmacy margin beside customer savings and made the financial issues part of the instructions to both dispensing and consultant pharmacists. The complaint alleged that PharMerica used regional scorecards to track therapeutic interchanges and determine employee bonuses. It also alleged that a staffed call center encouraged nursing-home physicians to switch patients from Procrit to Aranesp through calls and letters.

The same complaint alleged that monthly drug reviews became opportunities to drive switches. It described an Omnicare rebate arrangement that increased the rebate percentage as purchases rose and offered an additional incentive tied to Aranesp’s market share against Procrit. The purchasing contract supplied the financial incentive. The consultant’s recommendation could carry it into the resident’s treatment.

The homes’ response cuts through the sales pitch. According to the complaint, nursing homes complained that their physicians were repeatedly asked to switch patients between the drugs because of manufacturer rebates, rather than patient care or prices that helped the homes.

We see the absurdity in the complaint’s account: a required medication review turned into a sales opportunity. Every month.

Facility Discounts and Other Reimbursed Prescriptions

Facility discounts can buy a different decision: which pharmacy gets the nursing home’s business. The alleged benefit goes to the facility through a lower bill, while the pharmacy gains prescriptions reimbursed separately.

The government alleged that Omnicare offered discounted daily and fee-for-service rates, prompt-payment discounts and free drugs to reduce facility expenses and obtain other reimbursed prescription business. The facility-discount settlement agreements covered inducements from January 19, 2004 through June 30, 2012, and resulting claims through December 31, 2013.

The financial split explains the appeal of the alleged deal. A nursing facility could receive lower Medicare Part A-related costs while its referrals generated separately paid drug business for the pharmacy. Under the alleged deal, the facility saved on its bill while taxpayers funded the referred prescriptions.

An invoice showing a low facility rate captures the concession. The referral arrangement and prescription claims show what business the pharmacy expected in exchange. Together, they explain why the facility’s apparent saving matters to the payer funding the other prescriptions.

Omnicare agreed to a $124.24 million civil settlement in June 2014 to resolve those allegations. The resolution covered two whistleblower cases. The Justice Department announced a $17.24 million award to one whistleblower from that recovery.

A Financial Inducement Can Sit Inside an Acquisition

A separate whistleblower complaint concerning Omnicare’s nursing-home contracts alleged that the company bought institutional pharmacies at inflated prices to obtain their captive nursing-home customers. It described a high package sale price paired with last-minute or backdated long-term contracts, and cash inducements to nursing-home owners described as loans.

That allegation adds a different place to look for the benefit: the acquisition price or financing arrangement. The pharmacy invoice would tell only part of the story. The purchase terms and attached facility contracts would explain what business came with the transaction.

The complaint alleged that prescriptions generated by those inducements led to false claims for reimbursement from federally funded health care programs. Its connection was specific: financial benefit to the owners, pharmacy contracts, then reimbursed prescriptions. This is the same facility-access question raised by discounts, expressed through a different deal.

What the Omnicare and PharMerica Settlements Show

We see the same pharmacy, Omnicare, back at the settlement table with different drugs and different deals. The Omnicare and PharMerica settlements put a price on each set of allegations.

Omnicare’s November 2009 civil settlement was $98 million. It covered the manufacturer-and-facility allegations described above, including the consultant and purchasing arrangements.

For Aranesp, Omnicare agreed to a separate $4.19 million settlement in February 2014. PharMerica’s $2.5 million pharmacy settlement was announced in December 2015. The government joined the whistleblower’s case against Amgen and Omnicare. The whistleblower pursued PharMerica.

Depakote produced another pair of pharmacy settlements. PharMerica agreed to pay $9.25 million in October 2015, and Omnicare agreed to pay $28.125 million in October 2016. Those cases concerned alleged manufacturer payments and consultant recommendations involving Abbott’s drug. They put another product into the same pharmacy-side question: what did the payment buy from the people influencing prescriptions?

The contrast with facility discounting matters. In the consultant arrangements, the alleged manufacturer benefit moved toward the pharmacy and its recommendation process. In the facility arrangement, the alleged benefit moved from the pharmacy toward the nursing home to secure business. An insider who knows which direction the value moved can explain far more than a suspicious payment label.

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

Where the Benefit Meets the Prescription

The useful records connect the benefit, the decision it was meant to influence and the reimbursed prescription. Different people inside the business may understand different parts of that connection.

A manufacturer agreement shows what the pharmacy was paid to do. Consultant recommendations and the prescriber’s orders show how the proposed switch reached the resident. A facility’s rate schedule shows its discount, while the referral and prescription records connect that saving to the pharmacy’s other business.

For a whistleblower case involving the Anti-Kickback Statute, we examine what the people arranging the deal understood and how it connected to government-paid prescriptions. Your knowledge of why a recommendation changed or what a discount was meant to secure helps us connect the contract to the business behind it.

When You Know What the Deal Bought

If you know the payment behind a consultant recommendation or the business promised for a facility discount, speak with our whistleblower experts about that arrangement. We work beside you to build your strongest pharmacy kickback whistleblower case around the decisions you understand and bring in healthcare fraud whistleblower lawyers who know institutional pharmacy contracts. We bring the expertise and partnership to carry the case forward with you.