Drug Swapping: Omnicare Pays $120M To Settle Kickback Charges

Once again, Omnicare is settling kickback and false claims charges. The nation’s largest nursing home pharmacy will pay $120 million to the US government to resolve allegations of engaging in ‘swapping,’ which refers to offering below-market discounts on Medicare Part A medications in exchange for the opportunity to also sell Medicaid and Medicare Part D drugs, which provide a much higher return. Starting in 1998, Medicare began paying nursing homes a flat fee to care for patients, which included the cost of medicines, putting the facilities at risk if prices rose. And so, Omnicare allegedly provided “commercially unreasonable” discounts and, in exchange, was able to profit dramatically by selling higher margin drugs that paid for by Medicaid and Medicare Part D, according to court documents (here is the lawsuit). A similar allegation filed in a different lawsuit notes that, in 1998, Omnicare derived 3 percent of its sales from Medicare and 38 percent from Medicaid, or $615 million. By 2012, Medicare accounted for 50 percent of its sales and Medicaid contributed 7 percent, or $3.3 billion. In other words, the pharmacy was getting more and more business each year as swapping increased (see page 5 of the lawsuit). The settlement, which must still be approved by a federal court judge, ends a whistleblower lawsuit filed three years ago by Donald Gale, who was a general manager of an Omnicare pharmacy in Wadsworth, Ohio, and will receive up to 30 percent of the recovery....
Source: Pharmalot - Category: Pharma Commentators Authors: Source Type: blogs