Omnicare: The Aranesp Rebates Behind the Drug Switches

In the Omnicare Aranesp fraud case, Omnicare agreed to pay $4.19 million to resolve allegations that it accepted Amgen kickbacks for switching Medicaid beneficiaries to Aranesp. The complaint described rebates negotiated at the corporate level, education aimed at consultant pharmacists and nursing homes complaining about repeated requests to change residents’ medications. The alleged deal put the pharmacy’s rebate ahead of residents’ care, with Medicaid paying for the prescriptions.

Omnicare supplied pharmaceuticals and services to long-term-care facilities and residents. Amgen manufactured Aranesp. The government alleged that Amgen paid Omnicare to move nursing-home patients from a competing drug to Aranesp. The complaint identified that competing drug as Procrit. Both drugs treat anemia.

How the Aranesp Rebates Encouraged Drug Switching

The alleged Aranesp kickbacks rewarded both purchase volume and market share. According to the whistleblower’s complaint, the pharmacy could earn a much larger rebate by reaching a higher purchasing threshold.

The complaint gives a specific contract example for October through December 2005. Omnicare would earn a 3% rebate if it purchased at least $9,900,000 of Aranesp, but a 23% rebate if purchases reached $13,400,000. It alleged that Amgen calculated the rebate by multiplying the amount purchased by the applicable percentage. The higher rate therefore changed the return on the purchases themselves, giving the pharmacy a reason to push toward the next threshold.

The complaint also alleged that Amgen offered market-share rebates comparing Aranesp with Procrit, reviewed rebates with Omnicare’s purchasing management and amended contracts as competing offers changed. Drug selection had become part of a negotiation between manufacturers and the pharmacy, according to that account.

The Department of Justice’s announcement described more than rebate checks. The alleged payments and benefits included grants, speaker fees, consulting services, data fees, dinners and travel. The government’s case connected those benefits to Omnicare’s efforts to move Medicaid prescriptions to Aranesp.

Where the Switch Reached the Nursing Home

Omnicare’s alleged therapeutic interchange program carried the purchasing arrangement into clinical work. The complaint described a pilot program in 2003 and a July 2005 letter to Omnicare pharmacists and regional clinical directors reinforcing the switch from Procrit to Aranesp.

Consultant pharmacists were an important channel. The complaint alleged that Amgen and the pharmacy defendants used monthly drug-regimen reviews, through which pharmacists recommended changes to attending physicians, to promote switches. It also alleged that Amgen jointly funded educational programs with Omnicare to encourage consultant pharmacists and other nursing-home health care professionals to recommend Aranesp.

The financial benefit could fall on different sides of the pharmacy counter. Some nursing homes complained that converting certain residents increased their drug costs, according to the complaint. Omnicare allegedly responded by narrowing which patients the program would switch. The whistleblower described the facilities’ broader objection:

That allegation puts the conflict plainly: the pharmacy could benefit from a switch that the nursing home did not want. In that account, the resident’s medication became the means of earning the rebate.

When Anemia Education Meant Drug Conversion

The complaint alleged that Amgen used educational funding to advance the same conversion targets. It quoted an email from Amgen’s director of corporate accounts about programs for Omnicare:

In the email quoted by the complaint, the concern was which manufacturer’s business the education would grow. The complaint alleged that Amgen’s sales and marketing personnel selected speakers for marketing goals, and that speakers were instructed to follow company scripts and PowerPoint slides. It also alleged that promotional materials substituted chronic kidney disease for chronic kidney failure when promoting Aranesp, pitching it for patients beyond its approved anemia use.

The complaint also described how Amgen tracked facility adoption. According to the complaint, Amgen ran a contest in which sales employees received credit for nursing-home beds brought under company-developed or influenced anemia protocols. The employees with the most points earned bonuses. In that alleged contest, a facility’s clinical protocol had become a sales target.

The Omnicare Aranesp Settlement

The Department of Justice announced Omnicare’s civil settlement on February 27, 2014. It resolved a False Claims Act qui tam case filed in South Carolina and allocated a share to the whistleblower. The complaint identifies the whistleblower as an Amgen employee who had managed the Aranesp sales team in its long-term-care and home-health division.

Amgen reached its own separate $24.9 million settlement in 2013 over alleged payments to long-term-care pharmacies to induce Aranesp interchange.

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

What Evidence Is Needed to Report Fraud?

For a drug-interchange case, our whistleblower experts trace the connection between manufacturer payments, pharmacy instructions, prescription changes and government claims.

In an arrangement like the one alleged here, we examine rebate schedules alongside purchasing records to understand the financial targets. We follow interchange letters and drug-regimen reviews to the physician’s order, then connect dispensing and Medicaid billing records to the prescription. Someone who knows how the pharmacy worked can help explain where the financial target became a clinical instruction.

The California Research Bureau’s 1997 report Fraud and Abuse in the Health Care Market of California describes kickbacks as payments for channeling business to another party. The Aranesp allegations show how that steering could travel through a clinical recommendation: the manufacturer paid the pharmacy, while the pharmacist’s recommendation reached the physician.

Different Pharmacy Deals, Different Allegations

The Aranesp complaint also described PharMerica’s role in the arrangement. It alleged that PharMerica operated a clinical call center soliciting physicians by phone and mail, and used regional scorecards to determine employee bonuses for interchange performance.

The manufacturer-to-pharmacy channel appears in another drug case. In a separate Abbott Laboratories complaint, whistleblowers alleged that payments to Omnicare and PharMerica encouraged promotion of Depakote and switches from competing products. The recurring concern is manufacturer money influencing a pharmacy’s recommendations to prescribers.

Other pharmacy cases turn on access to customers. Omnicare’s separate below-cost-contract settlement concerned allegations that discounted facility drug contracts bought access to separately reimbursed business. A separate PharMerica swapping case alleged below-cost Part A drugs in exchange for access to Part D and Medicaid prescriptions. In the Mariner and Sava pharmacy-sale matter, the alleged inducement ran through a pharmacy acquisition tied to nursing-home business commitments.

Each arrangement leaves different evidence: a manufacturer’s rebate schedule, a facility’s pricing contract, or an acquisition agreement. Knowing which decision you saw is where our review begins.

Your View of the Pharmacy Deal

If you know how a rebate target reached the prescribing decision, speak to one of our whistleblower experts about the arrangement you saw. We build the case with you, bring in healthcare fraud whistleblower lawyers who understand manufacturer kickbacks and long-term-care pharmacy contracts, and stay beside you through the pursuit of a recovery.