As announced on Monday, October 17, 2016, by the United States Department of Justice (“DOJ”), the nation’s largest nursing home pharmacy, Omnicare Inc. (a CVS Health company), has agreed to pay $28.125 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting Depakote for nursing home patients.

According to the government’s complaint, Omnicare disguised the kickbacks it received from Abbott in a variety of ways. Abbott allegedly made payments to Omnicare under the guise of “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote. The complaint provided an example revolving around its “Re*View” program in which Abbott funded with a $50,000 grant. While Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents. In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program.

The complaint also alleged that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced, and the amount of Depakote prescribed per resident. Abbott allegedly funded Omnicare management meetings on Amelia Island in Florida, offered free tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

Of the settlement amount, approximately $20.3 million will go to the United States, with $7.8 million allocated to cover Medicaid program claims by states that elect to participate in the settlement.

Benjamin C. Mizer, Principal Deputy Assistant Attorney General and head of the DOJ Civil Division, stated,

Every day, elderly nursing home residents suffering from dementia rely on the independent judgment of our nation’s healthcare professionals for their personal care and their medical treatment. Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.

Special Agent in Charge Nicholas DiGiulio of the Department of Health and Human Services Office of Inspector General (HHS OIG), said, “it is disturbing that any health care corporation would pay kickbacks that corrupt the professional medical decision making process in order to pad their profits. These practices are unacceptable and will not be tolerated.”

This settlement, together with prior settlements with Abbott and PharMerica, resolves allegations in two federal court lawsuits pending in the Western District of Virginia, filed by Richard Spetter and Meredith McCoyd, former Abbott employees. The United States filed a complaint-in-intervention against Omnicare in December 2014 and as part of today’s resolution, McCoyd will receive $3 million from the federal share of the settlement.