(Updates with comment from a nursing-home chain.)
By Brent Kendall
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Geriatric pharmacy company Omnicare Inc. (OCR) will pay $98 million to settle charges that it engaged in several kickback schemes with drug makers and nursing homes, the U.S. Justice Department announced Tuesday.
The department also said IVAX Pharmaceuticals, a unit of Teva Pharmaceutical Industries Ltd. (TEVA), will pay $14 million to settle allegations that it paid $8 million in kickbacks in exchange for Omnicare's agreement to buy $50 million worth of IVAX drugs.
The Justice Department alleged that Omnicare regularly paid kickbacks to nursing homes in order to induce the homes to refer their patients to Omnicare for pharmacy services.
Department lawyers also said Omnicare solicited and received kickbacks from Johnson & Johnson (JNJ) in exchange for agreeing to recommend that doctors prescribe J&J antipsychotic drug Risperdal.
Omnicare's alleged actions caused false claims to be submitted to Medicare, Medicaid and other federal health care programs, the department said.
Omnicare disputed the government's allegations in a written statement and said the settlement does not include any finding of wrongdoing or any admission of liability by the company.
"The company agreed to settle the matters in order to avoid expensive and time-consuming litigation and to focus on its mission of providing high-quality pharmaceutical care for the frail elderly," Omnicare said.
A Johnson & Johnson spokeswoman who fielded questions about the case referred to the company's most recent quarterly report, in which it said several employees of its pharmaceutical subsidiaries have been subpoenaed to testify before a grand jury in connection with the investigation. The Justice Department said in a two-page court filing Tuesday that it expects to make a decision soon on whether to intervene in a lawsuit that made the allegations against Johnson & Johnson.
Teva spokeswoman Denise Bradley said IVAX denied any liability in the case but settled to avoid the uncertainty and expense of litigation.
Separately Tuesday, the Justice Department said it was intervening in a lawsuit alleging that two nursing-home chains, Mariner Health Care Inc. and SavaSeniorCare Administrative Services, accepted kickbacks from Omnicare in return for pharmacy-service contracts.
SavaSeniorCare said in a statement that it was committed to quality patient care. It said the allegations involved a transaction that occurred before its current management team was in place.
Officials at Mariner Health Care did not return a call for comment.
The Omnicare case originated with five lawsuits filed by individuals who reported the alleged wrongdoing under a federal law that provides financial rewards to litigants who report false claims made against the government.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com