Office of the Attorney General
Omnicare and Ivax Pharmaceuticals to Pay $98 Million to Settle Allegations of Fraud
Attorney General Jack Conway announced today that Kentucky has joined with other states and the federal government in reaching an agreement with Omnicare, Inc. and IVAX Pharmaceuticals, Inc. to settle allegations that the companies engaged in unlawful kickback schemes that defrauded federal and state healthcare programs. Omnicare is a Maryland based corporation headquartered in Covington, Ky., that specializes in providing pharmacy services to long-term care facilities. IVAX Pharmaceuticals is a Florida based corporation, headquartered in Weston, Fla., that manufactures generic drugs.
The states and the federal government will receive a total of $112 million in civil damages to compensate Medicaid and Medicare programs for harm suffered as a result of the conduct. As part of the settlement, the Commonwealth of Kentucky will receive $275,608.62 as the state’s share of restitution to the Kentucky Medicaid Program. As one of the conditions of the settlement, Omnicare and IVAX have also entered into Corporate Integrity Agreements with the Office of the Inspector General of the United States Department of Health and Human Services (HHS-OIG), which will closely monitor the companies’ practices going forward.
These settlements are based on five separate qui tam lawsuits, or "whistleblower" suits, filed by private individuals and consolidated in the United States District Court for the District of Massachusetts under state and federal false claims statutes. The government entities alleged that Omnicare and IVAX engaged in several unlawful kickback schemes that included the following:
- Omnicare solicited and received $8 million in payments in exchange for the company’s agreement to purchase $50 million in generic drugs from IVAX Pharmaceuticals and to drive utilization for the generic drugs for its nursing home patients.
- Omnicare paid $50 million to certain nursing home chains in exchange for 15-year contracts with each company to refer nursing home patients to Omnicare for the patients’ drug purchases.
- Omnicare provided pharmacy consultants to long-term care facilities throughout the country at below market rates in exchange for the facilities’ agreement to use the company’s pharmacy services exclusively for its patients.
- Omnicare solicited and received kickback payments in exchange for the company’s agreement to convince physicians to prescribe the antipsychotic drug Risperdal as an initial drug or in place of competitors’ antipsychotic drugs.
Since taking office in January 2008, Attorney General Conway has recouped more than $100 million for the Kentucky Medicaid Program. That includes jury verdicts announced earlier this year against drug manufacturers Sandoz for $16 million and AstraZeneca for $14.7 million.