Omnicare Will Settle Kickback Cases for $98M

Omnicare Inc., which dispenses drugs to nursing homes and long-term care facilities, will pay $98 million to settle allegations it paid kickbacks to nursing homes to gain their business, and also received kickbacks for buying and recommending drugs.

The U.S. Department of Justice said the Covington, Ky., company paid a $50 million kickback to two Atlanta nursing home chains so the businesses would continue to use Omnicare.

The government also said Omnicare asked for, and received, $8 million in kickbacks from Ivax Pharmaceuticals, and in return, Omnicare bought $50 million in drugs from Ivax. Omnicare also allegedly asked for and received a kickback from Johnson & Johnson in return for recommending Johnson & Johnson's anti-psychotic drug Risperdal to physicians who took care of nursing home patients.

Omnicare denies the government's claims and denies any liability but said it cooperated with the review. It agreed to the basic terms of the settlement in late June and finalized it on Tuesday. The investigation began as a whistleblower lawsuit in 2002.

Ivax, which is now a unit of Teva Pharmaceutical Industries Ltd., will pay $14 million to resolve the investigation into its behavior. Ivax also denies any liability.

The government said it is continuing to investigate the two nursing home chains, Mariner Health Care and SavaSeniorCare Administrative Services, and the heads of the businesses, Leonard Grunstein, Murray Forman, and Rubin Schron, for accepting Omnicare's kickbacks.

"Illegal conduct like this can undermine the medical judgments of health care professionals, lead to patients being prescribed medications they do not need, and drive up the costs of health care," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. The agency added that Omnicare specializes in providing drugs to homes caring for dementia and Alzheimer's patients, who have little control over their medications.