Johnson & Johnson viewed Omnicare's pharmacy consultants as an "extension of [the J&J] sales force," the Department of Justice alleges in a complaint brought against the company.

DoJ claims J&J paid kickbacks to Omnicare, the nation's largest nursing home pharmacy, to get it to purchase and recommend J&J drugs, including the antipsychotic Risperdal (risperidone) for nursing home patients. The suit, filed Jan. 15 in the U.S. District Court for the District of Massachusetts, comes two months after DoJ reached a $98 million settlement with Omnicare (Also see "Omnicare Settlement With DoJ Shows Power Of Nursing Homes In Driving Rxs" - Pink Sheet, 9 November, 2009.).

That settlement described J&J's alleged kickbacks to Omnicare but the complaint against J&J goes into far more detail about the arrangements between the two companies, which DOJ says caused Omnicare to submit false claims to Medicaid.

The suit says J&J kickbacks took various forms, including market share rebate payments that were conditioned on Omnicare engaging in "active intervention programs" for J&J drugs, and payments ostensibly for purchase of Omnicare physician prescriber data in lieu of rebate payments.

J&J Nearly Tripled Its Drug Sales to Omnicare

DoJ says the kickbacks were successful since from 1999 through 2004 Omnicare's annual purchases of J&J drugs increased from approximately $100 million to more than $280 million and annual Risperdal purchases alone topped $100 million. The complaint also cites a J&J internal memorandum noting that Omnicare pharmacists were able to get physicians to accept their prescribing recommendations more than 80 percent of the time.

"Kickbacks in the nursing home pharmacy context are particularly nefarious because they can result in excessive prescribing of strong drugs to patients who have little or no control over the medical care they are receiving," Massachusetts U.S. Attorney Carmen Oritz stated in a press release. "Nursing home doctors should be able to rely on the integrity of the recommendations they receive from pharmacists, and those recommendations should not be a product of money that a drug company is paying to the pharmacy."

J&J said it is reviewing the government's complaint and will address it in court. "We believe airing the facts will confirm that our conduct, including rebating programs like those the government now challenges, was lawful and appropriate," the company stated.

The complaint claims that rebate payments were contingent on active intervention by Omnicare. It says a 1997 agreement called for J&J to sell Omnicare certain drugs - including Risperdal, Propulsid , Levaquin , Procrit , Duragesic and Ultram - and for J&J to pay Omnicare quarterly market share rebates, where the percentage amount of the rebate on each drug increased as market share of that drug increased. Market share was determined based on Omnicare's purchases of each drug in comparison to Omnicare's purchases of competing products.

DoJ states that from 1999 through 2004 J&J paid Omnicare tens of millions of dollars in market share rebates. In many instances, at Omnicare's request, J&J paid quarterly rebates in advance, "thus effectively providing Omnicare with interest-free loans of millions of dollars," the complaint says.

J&J Replaced Rebate Payments to Keep "Best Price" Down

The government also alleges that J&J substituted rebate payments with payments for Omnicare physician prescriber data in order to avoid reporting a new "best price" for Risperdal to Medicaid. Under a 2000 agreement J&J was to pay Omnicare $4.6 million for a report listing 200 competitive prescribing physicians and market share reports by pharmacy site. But DoJ says Omnicare never supplied much of the data and J&J never demanded it.

DoJ also claims that J&J supplemented its rebate and data fee kickbacks to Omnicare by paying other kickbacks in the form of grants, educational funding and meeting sponsorship fees. For example, the complaint cites a J&J document noting that the company paid Omnicare more than $1 million from 1997 to January 1999 for "educational, pull-through, and social activities."

The complaint states that Omnicare ceased its Risperdal intervention activities in 2003 when it became concerned about increased risk of cerebrovascular events, including stroke, in elderly patients receiving the drug. In 2005 FDA required all atypical antipsychotic drugs to carry a black box warning of increased risk of death in elderly patients compared to placebo.

J&J implemented a similar initiative for its antibiotic Levaquin in 1999, the complaint says. It notes that Bayer's Cipro had been the antibiotic of choice but as a result of the initiative it went from a market share of 80 percent to the 28 percent range from the fourth quarter of 1998 to the second quarter of 2001, while Levaquin's share rose from 19.2 percent to 66.4 percent in this time period.

The government intervened in two consolidated False Claims Act whistleblower suits brought by Bernard Lisitz and David Kammerer, who were also the relators in the case against Omnicare.

- Brenda Sandburg (b.sandburg@elsevier.com)

DoJ Claims J&J Paid Kickbacks To Pharmacy To Boost Risperdal Use In Nursing Homes

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