Louisville-based PharMerica Settles Fraud Lawsuit

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PharMerica Corp., the Louisville-based company and one of the nation’s biggest providers of drugs to nursing homes, closed out its 2015 by agreeing to write another large check to the government to settle a lawsuit accusing it of defrauding federal health care programs.

The agreement to pay $2.5 million was announced by the U.S. attorney’s office in Columbia, S.C. PharMerica, which is based in Jeffersontown’s Bluegrass Commerce Park, did not disclose the deal to its shareholders. But it capped a year in which PharMerica agreed to pay the government $43.25 million to resolve three major Medicare and Medicaid fraud cases.

The Kentucky Center for Investigative Reporting revealed last summer PharMerica’s fraud and kickback schemes.

The latest settlement brought a final resolution to a whistleblower lawsuit filed in 2011 by Frank Kurnik, the former director of long-term care at pharmaceutical giant Amgen Inc. Kurnik claimed that Amgen paid PharMerica kickbacks in return for switching nursing home residents to Aranesp, an Amgen anemia drug, for uses not approved by the Food & Drug Administration.

“Public health insurance programs shouldn’t foot the bill for drug company schemes that manipulate doctors and patients to maximize profits,” said Bill Nettles, the U.S. attorney for South Carolina, in a statement. “This case is an excellent example of how the government can work together with private whistleblowers to recover money for taxpayers.”

PharMerica spokesman David Froesel did not respond to a request for comment Monday.

Last year was a busy one for PharMerica’s legal department.

In May, the company agreed to pay $31.5 million to settle claims that it dispensed addictive painkillers to nursing home residents without prescriptions, then sent the bills to Medicare for repayment. As part of the deal, PharMerica signed a five-year corporate integrity agreement with the U.S. Department of Health & Human Services, which imposes tougher ethics and compliance requirements on companies.

PharMerica again opened its wallet to the government in October. It agreed to pay $9.25 million to settle another kickbacks-for-drug-switching lawsuit, this one involving Abbott Laboratories and its anti-seizure drug Depakote.

In none of the matters settled in 2015 was PharMerica charged criminally. Amgen, meanwhile, pleaded guilty to a federal criminal charge of drug misbranding. It paid a total of $762 million in fines in settling all criminal and civil charges. Abbott Labs paid $1.5 billion to resolve criminal and civil claims.

Kentucky expected to receive a portion of the PharMerica settlement in the Amgen case, but an amount was not available Tuesday, according to Attorney General Andy Beshear’s office. The state was to have received $27,838 from PharMerica in the Abbott Labs case.

Kurnik, who left Amgen in 2013, said the cases are instructive of the scope of health care fraud in the United States.

“The PharMerica case is yet another reminder of how medical decisions impacting vulnerable patient populations are being made at a corporate level for monetary as opposed to medical reasons,” Kurnik said by email.

“Until we correct the situation where large health care organizations are repeatedly willing to risk Medicare fraud for a ‘slap on the hand’ in return for millions, sometimes billions, in profits, we have little hope of improving this situation,” he said.

Reporter James McNair can be reached at jmcnair@kycir.org and (502) 814-6543.

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