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Abbott Labs whistleblower awarded $1 million in drug kickback settlement

A former employee of Abbott Laboratoratories will collect $1 million from a $9 million settlement in a kickback case against the nation’s second-largest nursing home pharmacy, PharMerica Corp.

The settlement resolved allegations in a False Claims Act lawsuit filed by Meredith McCoyd that PharMerica solicited and received kickbacks from drug maker Abbott in exchange for promoting the prescription drug Depakote for nursing home patients. 

PharMerica is headquartered in Louisville, Kentucky.

McCoyd filed her lawuit in federal court in the Western District of Virginia.

About $7.6 million of this week’s settlement will go to the United States, and $2.5 million was allocated to cover Medicaid program claims by states that elect to participate in the settlement. 

The Medicaid program is jointly funded by the federal and state governments.

The qui tam or whistleblower, provisions of the False Claims Act permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The FCA also allows the government to intervene and take over the action, as it did in part in this case. 

In May this year, a PharMerica pharmacist from Wisconsin who was fired after she told federal authorities her employer might be dispensing dangerous drugs without a doctor’s prescription was awarded $4.3 million as part of a False Claims Act settlement.

Jennifer Denk first told her bosses in 2009 the pharmacy was using her license to dispense OxyContin and fentanyl without adequate control. She also believed PharMerica was falsely billing the government for some prescriptions.

When the PharMerica executives didn’t take any action, Denk contacted federal authorities.

She filed a qui tam complaint. The government intervened and took over the case.

PharMerica agreed to pay the United States $31.5 million to resolve the lawsuit.

The DOJ said Wedensday’s settlement resolved allegations “that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.” 

The government alleged that the kickbacks were disguised as rebates, educational grants and other financial support.

In 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution. It resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.

The DOJ said the claims resolved by Wednesday’s settlement were allegations only and there has been no determination of liability.

The cases were United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.). 

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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