The Kentucky Center for Investigative Reporting had an illuminating article by James McNair about sales-boosting schemes and drug therapy in nursing homes.
Abbott Laboratories paid millions of dollars in “rebates” to get pharmacy companies to pump up prescriptions of an anti-seizure drug to agitated dementia patients in nursing homes, a use not approved by the Food & Drug Administration. Medicaid payments for the drug, Depakote, went on to top $7 billion. Thanks to a whistleblower lawsuit, the Justice Department caught on. Abbott pleaded guilty in 2012 to a criminal charge, settled civil kickback and fraud claims and paid $1.5 billion in fines.
The drug giant Amgen Inc. enlisted the same pharmacy companies to promote its Aranesp anemia drug for uses beyond its FDA approval. Again alerted by a whistleblower suit, the Justice Department stepped in. Amgen pleaded guilty to the crime of drug misbranding, settled civil kickback and fraud charges and paid a total of $762 million in fines.
The defendant remaining in both civil cases is called PharMerica Corp.. PharMerica has no retail stores, but is the second-biggest operator of nursing home pharmacies in the country. It has about 6,000 employees in 45 states. With $1.9 billion in revenue last year, it is the 10th-biggest publicly traded company in Kentucky, according to rankings by The Lane Report.
PharMerica was formed by a merger in 2007. Before that it existed as the institutional pharmacy divisions of Kindred Healthcare, a Louisville company, andAmerisourceBergen of Chesterbrook, Pa. It hired Gregory Weishar (pronounced WISH-er) as chief executive in 2007. He has run the company ever since.
“PharMerica provides the right medication at the right time,” states the company’s website.Companies like PharMerica, and its larger competitor Cincinnati-based Omnicare Inc., occupy a strategic place in the flow of drugs to nursing home patients. Acting on behalf of the homes, they buy drugs from the pharmaceutical companies in bulk, often repack them in foil packs, or “bingo cards,” and dispense them under the supervision of employees known as consultant pharmacists. PharMerica says it has a 15 percent share of the U.S. market. It calls its performance “industry-leading.”
The civil suits accuse PharMerica of giving certain drugs to nursing home patients in return for drug company kickbacks, not because they were the “right medication.” The suits were filed by drug company insiders who claim to have knowledge of payoffs disguised as “rebates” or “discounts.” Paying kickbacks appear to be standard practice in the pharmaceutical industry. The Justice Department doesn’t keep count, but kickbacks are a common theme in the many Medicare and Medicaid cases involving aggressive new-drug rollouts and off-label switcheroos.
Since 2005, it has agreed to pay $40 million in fines to settle federal complaints. Last week, the Justice Department said PharMerica will pay $31.5 million to settle allegations that it dispensed addictive painkillers to nursing home patients without prescriptions, then falsely billed Medicare. In that case, three PharMerica pharmacists in Wisconsin and Florida civilly accused the company of regularly dispensing painkillers, such as fentanyl patches, to nursing home patients without prescriptions from 2007 through 2009. As part of the settlement, PharMerica agreed to a five-year “corporate integrity agreement,” a probation-like deal that places burdensome compliance obligations on corporate fraudsters.
In earlier settlements, three of its Virginia pharmacies were accused in two civil suits of giving painkillers to nursing home patients without prescriptions on 1,233 occasions. Separately, it was accused of billing the Tennessee Medicaid program for more drugs than it actually dispensed. And, again in Virginia, the U.S. Department of Health & Human Services’ Office of Inspector General accused PharMerica of paying an exorbitant amount for a newborn pharmacy in return for the lucrative meds business of the pharmacy owner’s 25 nursing homes.
The last case was deemed so flagrant that the IG sought to ban PharMerica from federal healthcare programs for 10 years. It settled, in 2005, for a $6 million fine and a five-year corporate integrity agreement.
Patrick Burns, co-director of Taxpayers Against Fraud, had no reservations talking about PharMerica. Burns said the pipeline from pharmaceutical companies to nursing homes is flush with monetary incentives to promote certain drugs and to sell more of them. Ultimately, he said, drug sales greased by kickbacks at the expense of nursing home residents, Medicare and Medicaid amount to profiteering. “That’s the perversion of the system,” Burns said. “At the end of the day, our oldest, sickest and poorest become cash cows.”
AARP, which represents 38 million Americans 50 and older, denounces the practice of financially induced drug-switching. “Such behavior is particularly troubling when the prescription drugs in question are being used in a manner that is inconsistent with the product labeling,” said Leigh Purvis, director of health services research at AARP’s Public Policy Institute. Prescribing should be based on what is clinically appropriate for a given patient, not financial incentives.”
Jan Scherrer, vice president of Kentuckians for Nursing Home Reform, a non-profit advocacy group in Lexington, said CEOs of companies involved in the kickback schemes should be held personally accountable. “It’s the same players — PharMerica and Omnicare,” Scherrer continued. “They keep doing this over and over and over, and all they get is a fine. And for them that fine is nothing more than the cost of doing business.”“I don’t understand why the CEOs of these companies aren’t being prosecuted. Why aren’t they being put in jail?” she said. “These are not victimless crimes. There are people in these nursing homes who are dying because they are being given these drugs.”