The U.S. Dept. of Justice has joined a whistleblower suit alleging that pharmaceutical manufacturer Johnson & Johnson violated the False Claims Act.
The complaint alleges that J&J paid millions of dollars in kickbacks to Omnicare, the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients. Omnicare had entered into an agreement with the federal government and many state governments in November 2009, paying $98 million to resolve the company’s civil liability for taking kickbacks from J&J.
In its complaint against J&J, the United States alleges that the company paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes.
A Wall Street Journal article says that the complaint sheds light on how middlemen like Omnicare can drive the sales of prescription drugs. The middlemen commonly receive rebates from drug manufacturers and such payments are legal unless government programs (like Medicare and Medicaid) don’t get the benefits of the rebates. In its quarterly reports to the government, J&J tried to disguise the rebates, prosecutors allege.