May 26, 2017 / 10:41 PM / 3 years ago

CVS's Omnicare to pay $23 million to resolve U.S. kickback case

BOSTON (Reuters) - CVS Health Corp’s Omnicare unit has agreed to pay $23 million to resolve a whistleblower lawsuit alleging that it took kickbacks from a drugmaker to promote two antidepressants, according to settlement papers released on Friday.

The accord, confirmed by the U.S. Attorney’s Office in Boston, will resolve a lawsuit against the pharmacy operator filed in 2007 by two former employees of drugmaker Organon USA Inc on behalf of the federal government and various states.

CVS in a statement said the alleged conduct at issue took place before it acquired Omnicare in 2015. Omnicare neither admitted nor denied wrongdoing as part of the settlement.

The lawsuit claimed that from 1999 to 2005, Omnicare and certain pharmacies it acquired sought and received kickbacks from Organon in the form of discounts in exchange for promoting the antidepressants Remeron and Remeron SolTabs.

The lawsuit said that as a result, Omnicare violated the False Claims Act by submitting kickback-tainted claims to Medicaid, the government health insurance program for the poor and disabled, for reimbursement.

The lawsuit was filed by Richard Templin and James Banigan, both of whom were former employees of Organon, which reached a related $31 million settlement in 2014.

Organon, originally based in the Netherlands, was acquired in 2007 by Schering-Plough Corp, which later merged with Merck & Co Inc.

Under the False Claims Act, whistleblowers can sue companies on the government’s behalf to recover taxpayer money paid out based on fraudulent claims. If successful, whistleblowers receive a percentage of the recovery.

While the U.S. Justice Department can intervene in such lawsuits, in this case, the U.S. government and the 28 states named in the complaint declined to intervene, leaving the ex-Organon employees to pursue it on their own.

Joel Androphy, a lawyer for Templin and Banigan, called the settlement “a fair resolution for all concerned.”

According to settlement papers, Omnicare agreed to pay the federal government more than $12.8 million and nearly $10.2 pursuant to state settlement agreements.

The federal government in turn has agreed to pay nearly $3.73 million to Templin and Banigan.

The case is U.S. ex rel. Banigan and Templin, et al, v. Organon USA Inc, et al, U.S. District Court, District of Massachusetts, No. 07-cv-12153.

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