PharMerica Agrees to Settlement in False Claims Case

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By Matthew Loughran

Oct. 7 — PharMerica Corp., one of the largest nursing home pharmacy services providers in the country, agreed to pay $9.25 million to settle allegations that it received kickbacks from Abbott Laboratories Inc. in return for promoting an Abbott prescription drug, the Department of Justice said Oct. 7 (United States ex rel. McCoyd v. Abbott Labs., Inc., W.D. Va., No. 1:07-cv-81, settlement announced 10/7/15).

The settlement requires PharMerica to pay approximately $6.8 million to the federal government to settle claims that it knowingly participated in a rebate plan with Abbott in return for promoting the anti-seizure drug Depakote to nursing home residents suffering from dementia and Alzheimer's disease in facilities served by PharMerica.

The agreement provides that 15 percent of the amount payable to the federal government, approximately $1 million, should be paid as a relator fee to whistle-blower Meredith McCoyd, one of the Abbott employees who originally brought a qui tam action under the False Claims Act.

The agreement also allocates $2.5 million to cover Medicaid program claims by states that agree to opt in to the settlement agreement.

Party Statements

The settlement "should serve as a stark reminder to pharmaceutical companies and those with whom they do business that the Department of Justice and its investigative agencies will continue to monitor their activities," Anthony P. Giorno, the U.S. attorney for the Western District of Virginia, where the case was brought, said in a news release issued by the DOJ Oct. 7.

"We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs," he added.

According to a corresponding news release issued the same day by the company, "PharMerica is pleased to resolve this matter and is committed to compliance and the highest standards of ethical conduct. PharMerica remains focused on operating with integrity and delivering industry-leading performance."

The agreement also settles claims against PharMerica in a separate, but consolidated action proceeding before the same federal judge, United States ex rel. Spetter v. Abbott Labs., Inc.Link, W.D. Va., No. 1:10-cv-6, settlement announced 10/7/15.

Other Defendants Have Settled

The settlement is the third and final agreement in the long-running litigation. Abbott was dismissed from the case in 2012 after agreeing to a $1.5 billion settlement.

The other pharmacy services company allegedly involved, Omnicare Inc., reached a preliminary settlement agreement in July; that agreement hasn't yet received full approval of the agencies involved.

According to a minute entry in the court docket, during a status conference on Oct. 5, the monetary portion of the Omnicare settlement is expected to obtain DOJ approval by the end of this week and counsel for Omnicare was still reviewing the draft settlement agreements with the company.

PharMerica was represented by William F. Gould, John L. Brownlee and Michael R. Manthei, of Holland & Knight LLP in Washington and Boston.

The government was represented by Brian J. McCabe and Edward C. Crooke, of the DOJ in Washington and Rick A. Mountcastle of the U.S. Attorney's Office for the Western District of Virginia in Roanoke, Va.

McCoyd was represented by Traci L. Buschner and Reuben A. Guttman, of Guttman, Buschner & Brooks PLLC in Washington, Richard A. Harpootlian in Columbia, S.C., and John R. Mooney of Mooney Green Saindon Murphy & Welch PC in Washington.

To contact the reporter on this story: Matthew Loughran in Washington at mloughran@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com