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Monday, November 09, 2009

Omnicare Settles Long Term Care Kickback Case; Is J&J The Real Target?

Now that federal health care fraud prosecutors have broken the billion dollar barrier in recent settlements, the conclusion of a $98 million settlement with long term care pharmacy provider Omnicare may not have caught your eye. And the simultaneous announcement of a $14 million settlement with Ivax (now part of Teva) for its dealings with Omnicare seems almost quaint. (Read our coverage in The Pink Sheet here.)

Ivax is paying just one percent as much as Lilly did to resolve claims related to its promotion of Zyprexa ($1.4 billion) and only about half-a-percent as much as Pfizer did to resolve claims related to the promotion of Bextra and several other products ($2.3 billion).

It stands to reason, right? The Lilly and Pfizer cases focused on primary care marketing--indeed, the Lilly case was fundamentally about Lilly's efforts to redefine schizophrenia as a primary care market. Primary care is where the money is (or was, at least) so the government is sure to claim bigger fines when it prosecutes in those areas.

It may not be that simple. Omnicare may have settled for less than $100 million, but some of its business partners--including the biggest of Big Pharma--are still on the hook.

Because long term care pharmacy may be a relatively small slice of the overall pharma market, but it is a big piece for some products--and the share of costs paid directly by the government is much higher than in primary care. And, with the launch of Medicare Part D, the unique aspects of that marketplace started to attract a lot more attention, both from manufacturers, who discovered that the quirks of the Part D rules appeared to give long term care pharmacy providers a great deal of leverage in the marketplace, and from the government, which began to ask more probing questions about how exactly that market segment works.

As we reported in The RPM Report at the time, the run-up to Part D prompted a number of new investigations of pharmaceutical industry contracting practices.

And those investigations are continuing.

Where might the next shoe drop? Well, the US Attorney's Office in Massachusetts offers a big hint in its press release announcing the Omnicare settlement.
The United States contends that Omnicare solicited and received kickbacks from Johnson & Johnson (J&J), a pharmaceutical manufacturer, in exchange for agreeing to recommend that physicians prescribe Risperdal, a J&J antipsychotic drug, to nursing home patients. The Government contends that J&J’s kickbacks to Omnicare took multiple forms, including: market share rebates that were conditioned on Omnicare engaging in an “Active Intervention Program” for Risperdal; payments disguised as fees for the purchase of data; payments disguised as educational grants; and fees to attend Omnicare meetings. Omnicare then used its consultant pharmacists to encourage physicians to prescribe Risperdal for their nursing home patients, but failed to disclose to physicians that the recommendations were a condition of Omnicare receiving the rebate payments from J&J.
Okay, so the feds are going after J&J just like they went after Ivax for its preferred generic agreements with Omnicare. But there's more:
After the conduct at issue, the Food and Drug Administration mandated that the label for Risperdal carry a “black box” warning that “Elderly Patients with dementia-related psychosis treated with atypical antipsychotic drugs [including Risperdal] are at an increased risk of death compared to placebo.”
That's the real kicker: the press release in effect accuses J&J of providing kickbacks to increase use of its product in a very vulnerable patient population (nursing home patients with dementia) where regulators subsequently concluded the product may have done more harm than good.

Now, apart from the assertions in the press release, the government hasn't made any formal complaint against J&J; the US Attorney says only that the investigation is ongoing. J&J notes its disclosures about the investigation in its SEC filings.

And that, too, makes for interesting reading. Here is what J&J says specifically about the Omnicare investigation:
"In September 2005, the Company received a subpoena from the U.S. Attorney’s Office, District of Massachusetts, seeking documents related to sales and marketing of eight drugs to Omnicare, Inc., a manager of pharmaceutical benefits for long-term care facilities. The Johnson & Johnson subsidiaries involved responded to the subpoena. Several employees of the Company’s pharmaceutical subsidiaries have been subpoenaed to testify before a grand jury in connection with this investigation. In April 2009, the Company was served with the complaints in two civil qui tam cases relating to marketing of prescription drugs to Omnicare, Inc. The complaints assert claims under the federal False Claims Act and related state statutes in connection with the marketing of several drugs to Omnicare. The government has not yet announced whether it will intervene in these cases."
But that is not the only investigation involving Risperdal disclosed by J&J. The company's 10-Q filing cites at least 8 other subpoenas received by the company involving promotions of the product:

(1) a January 2004 subpoena seeking information about "sales and marketing of, and clinical trials for" from the Office of Personnel Management (which runs the Federal Employee Health Benefit Program);

(2) a November 2005 subpoena seeking information about "marketing of and adverse reactions to" Risperdal from the Philadelphia US Attorney (which brought the Zyprexa case);

(3) grand jury "subpoenas" related to that investigation;

(4-6) three separate subpoenas from the feds in Boston, Philadelphia and San Francisco "concerning, respectively, sales and marketing of Risperdal by Janssen (now OMJPI), Topamax by Ortho-McNeil (now OMJPI) and Natrecor by Scios" seeking "information regarding the Company’s corporate supervision and oversight of these three subsidiaries, including their sales and marketing of these drugs";

(7) grand jury "subpoenas" in Boston related to those investigations; and

(8) a "HIPPA Subpoena" from Boston a "seeking information regarding the Company’s financial relationship with several psychiatrists."

That tally does not include product liability cases (including some filed by state and federal government payors) involving Risperdal, nor does it include numerous pricing cases that presumably involve Risperdal as well.

We have no idea when or if any of those cases will result in prosecutions or settlements. But if they do, we're betting there will be some big numbers on the table...

2 comments:

Cynthia said...

Nursing Home Pharmacy Settles Kickback Charges: http://www.newsinferno.com/archives/13739#more-13739

Daniel Haszard said...

Eli Lilly sells a drug {ZYPREXA} that can cause diabetes and then turn a profit on the drugs that treat the condition that they may have caused in the first place!

Eli Lilly has made $38 billion on Zyprexa and it was way oversold and caused diabetes and in some cases sudden death.
Eli Lilly has received a huge criminal fine over their Zyprexa cash cow,add it all up comes to $4.6 billion, in Zyprexa settlements,fines,litigation.


Did you know that Lilly made $ billions last year on diabetic meds, Actos,Humulin and Byetta?

Yes! They sell a drug that can cause diabetes and then turn a profit on the drugs that treat the condition that they may have caused in the first place!
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Daniel Haszard http://www.zyprexa-victims.com