A large scale investigation of Medicare fraud by pharmaceutical companies has led to a settlement with Omnicare and ongoing investigations of Johnson & Johnson and other major drug makers. The focus of the investigation is on alleged kickbacks to companies that dispense drugs in exchange for preferential treatment in the writing and filling prescriptions.
The Omnicare settlement includes repayment of $98 million plus interest to federal and some state government Medicare programs. The complaint alleged that Omnicare paid millions of dollars to two nursing home chains in exchange for the sale of several of their generic drugs. The company has admitted no wrong doing as part of the settlement but has agreed to implement new training and company policies to clarify future practices. IVAX, part of Israel’s Teva Pharmaceutical Industries, has agreed to pay 14 million plus interest as a part of their settlement. The investigation of Johnson & Johnson is ongoing.
Critics claim that the fines are not sufficient to discourage the behaviors. Some suggest that pharmaceutical companies should lose the ability to dispense for Medicare when they engage in these types of agreements with providers. Omnicare settled a similar complaint in 2006 by agreeing to pay $102 million for allegations of Medicare fraud but admitted no wrong doing as part of that settlement.