Omnicare: The Rebate Behind the Recommendation

The 2009 Omnicare manufacturer kickbacks case ended with the pharmacy paying $98 million to resolve allegations involving drug-company payments and nursing-home business. Later settlements covered Aranesp and Depakote separately. Across these cases, the government alleged that manufacturers paid for influence over drug recommendations made inside nursing homes. For a pharmacist who saw a rebate agreement alongside instructions to recommend a particular medicine, that connection is the heart of the story.

Omnicare supplied pharmaceuticals and services to long-term-care facilities and their residents. Its position put the pharmacy inside both the dispensing business and the medication review that could change what physicians prescribed. The alleged manufacturer payments reached that second role: a recommendation presented as clinical judgment could also help the pharmacy earn a rebate.

What the Manufacturer Payment Was Supposed to Buy

The manufacturer wanted prescriptions. The pharmacy had consultant pharmacists who regularly reviewed residents’ charts and recommended medicines to their physicians. In the government’s account, payments to the pharmacy bought access to that recommendation, then generated prescriptions billed to government health care programs.

This is the manufacturer side of long-term-care pharmacy kickbacks. Institutional pharmacies work under facility drug-supply agreements and consultant agreements alongside their payer and network contracts. Nursing facilities must obtain at least monthly medication-regimen reviews, including the resident’s chart. A consultant does not have to write the prescription to influence which drug the physician orders.

The recurring review matters. It gives a consultant another opportunity to recommend a change as part of ordinary care. A manufacturer rebate agreement can reward the pharmacy for the volume purchased or a drug’s share of that business. The Omnicare cases alleged that the commercial incentive reached into that clinical conversation.

We see the problem in the job the payment allegedly bought. The resident needed a medication review. The manufacturer wanted another prescription. Paying the pharmacy to turn the first into the second put a sales target inside the resident’s care.

The Manufacturer Arrangements in the 2009 Settlement

The November 2009 settlement announcement covered Omnicare’s manufacturer and facility arrangements. The manufacturer allegations included payments tied to Risperdal and resulting Medicaid claims, as well as payments from IVAX. IVAX’s separate civil payment was $14 million.

The Risperdal allegations show how the labels on the payments could hide their purpose. In its later account of the Johnson & Johnson resolution, the Justice Department described alleged payments to Omnicare through market-share rebates, data-purchase agreements, grants and educational funding. The government said those payments were intended to induce Omnicare’s consultant pharmacists to run active intervention programs promoting Risperdal and other Johnson & Johnson drugs in nursing homes.

The department described the consultants’ chart reviews and recommendations to physicians as the route to those prescriptions. It also reported that Johnson & Johnson viewed the consultants as an extension of its sales force. That is the conflict in a sentence: the manufacturer allegedly bought influence from people whose recommendations were supposed to reflect independent clinical judgment.

Johnson & Johnson agreed to pay $149 million in the 2013 civil pharmacy-kickback resolution over allegations that its payments caused Omnicare to submit false claims to federal health care programs. That was the manufacturer’s payment for its alleged role. Omnicare had already settled its own role in the earlier case.

The 2009 agreement also covered a different direction of payment: Omnicare allegedly gave value to obtain nursing-home business. Those allegations included Mariner/Sava contracts and below-cost consulting. The manufacturers allegedly paid for influence over drug choice, while Omnicare allegedly paid for access to the facility’s pharmacy business.

Aranesp Rebates and the Consultant’s Recommendation

The Aranesp allegations concerned therapeutic interchange: moving patients from the competing drug Procrit to Amgen’s Aranesp. The government alleged that Omnicare solicited and received kickbacks from Amgen in exchange for programs designed to switch Medicaid beneficiaries.

The whistleblower’s complaint described a contract that made the incentive concrete. Under the alleged Omnicare rebate schedule, purchases of at least $9.9 million in the final quarter of 2005 qualified for a 3% rebate. Purchases of at least $13.4 million qualified for a 23% rebate. The complaint also alleged an additional incentive tied to Aranesp’s market share against Procrit.

More purchases could therefore mean both more product earning a rebate and a higher rebate percentage. That makes the threshold in the purchasing agreement as revealing as the payment itself. An insider familiar with the contract and the recommendation program can explain how those incentives met.

The complaint alleged that nursing homes saw the consequences in repeated requests to change treatment:

The whistleblower also alleged that the manufacturers and pharmacies used required monthly drug reviews as a recurring opportunity to push those changes. The complaint also described a rebate schedule that increased the percentage as purchases rose.

The Parallel Inside PharMerica

The same complaint reproduced an internal PharMerica memo that put the commercial objective plainly:

The memo went on to say that dispensing and consultant pharmacists needed to understand the clinical, dosing and financial issues. The complaint separately alleged that PharMerica used regional scorecards to determine bonuses and a staffed call center to encourage nursing-home physicians to switch patients through calls and letters.

The parallel shows how a rebate arrangement could become work assigned to pharmacists and other staff: track the switches, contact the prescribers, reward the results. The supposed education had a sales measure attached.

Omnicare’s Aranesp Settlement

Omnicare agreed to pay $4.19 million in the Aranesp settlement announced on February 27, 2014. The Justice Department alleged performance-based rebates tied to market-share or volume thresholds, along with grants, speaker fees, consulting services, data fees, dinners and travel.

The resolution arose from a whistleblower’s qui tam case under the False Claims Act. The allegations concerned switches involving Medicaid beneficiaries, and the payment resolved Omnicare’s role in that arrangement.

The case reaches beyond a check labeled consulting or education. The government connected the manufacturer’s value to the pharmacy’s switching program and the government-funded patients it targeted. That is the connection a rebate analyst, consultant pharmacist or manufacturer employee may recognize from their own work.

Depakote and the Extra Prescription

Omnicare agreed to pay $28.125 million in the Depakote settlement announced on October 17, 2016. The government alleged that it solicited and received payments from Abbott Laboratories in exchange for recommending Depakote to nursing-home residents’ physicians. CVS Health acquired Omnicare in 2015, after the conduct covered by this settlement had ended.

The Justice Department described alleged grants and educational funding paid to induce those recommendations. Omnicare allegedly solicited manufacturer contributions to Re*View, which it presented as a health-management and educational program. According to the department’s account of the government’s complaint, internal documents called it the “one extra script per patient” program.

One extra prescription. We read that as a sales goal wrapped in an educational label, which is exactly what the government alleged.

The complaint also alleged that Omnicare’s rebates increased with the number of residents served and the amount of Depakote prescribed per resident. Abbott allegedly funded management meetings on Amelia Island, Florida, offered sporting-event tickets to management and made payments to local Omnicare pharmacies. The alleged payments reached beyond the central rebate contract.

The Texas attorney general’s account describes alleged recommendations to use Depakote for dementia-related agitation and aggression, and resulting false claims to Medicaid and other federal healthcare programs. Medicare was also covered by the civil resolution.

Former Abbott employees brought the qui tam cases behind the Depakote settlement, and the government joined part of their case. Their position illustrates why the pharmacy employee is not the only person who may understand the deal. Someone on the manufacturer’s side may know what a grant or rebate was expected to buy inside the pharmacy.

PharMerica had separately agreed to pay $9.25 million in October 2015 to resolve allegations that it received Abbott kickbacks. We see the same alleged bargain across these Omnicare resolutions: manufacturer money buying the pharmacy’s influence over prescriptions.

The Records That Connect the Deal to the Claim

An ordinary business document can reveal what a manufacturer payment was meant to buy: a rebate calculation, a scorecard or a consultant memo. An insider who understands those records can explain how a sales target reached the pharmacy’s recommendations.

We connect that knowledge with the prescription, dispensing and payment records. The manufacturer’s payment and the payer’s reimbursement follow different paths, and our work follows the connection between them. Where a switch needed prior authorization, we also examine who supplied the prescriber’s information. Product-code changes and rebilling can help connect the prescription change to what the pharmacy asked the payer to cover.

A Whistleblower’s Share of the Recovery

The Depakote announcement specified that one whistleblower would receive $3 million from the federal share of Omnicare’s settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Recommendation Was Worth

If you saw a manufacturer payment shape a pharmacy’s drug recommendations, tell our whistleblower experts about the arrangement. We work beside you throughout the case, building from your knowledge of the contracts, recommendations and claims, and bringing in pharmacy kickback whistleblower lawyers who understand how those pieces fit.