PharMerica Corp. to Pay $9.25 Million for Depakote Kickback

According to the Department of Justice the nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  PharMerica is headquartered in Louisville, Kentucky.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves 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 alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been 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.

“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to root out such corrosive practices from our health care system.”

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

Specialty Compounding Distributing Adulterated Drugs!

The U.S. District Court for the Western District of Texas entered a consent decree of permanent injunction against Specialty Compounding LLC, Raymond L. Solano III and William L. Swail to prevent the distribution of adulterated and misbranded drugs, the Department of Justice announced today. 

The department filed a complaint in the U.S. District Court for the Western District of Texas on Feb. 23, at the request of the U.S. Food and Drug Administration (FDA).  According to the complaint, Specialty Compounding manufactured both sterile and non-sterile drugs at a facility in Cedar Park, Texas, and distributed the company’s drugs to hospitals, surgery centers and health clinics in Texas and throughout the United States.  As noted in the complaint, Solano is Specialty Compounding’s pharmacist-in-charge and co-owner, and Swail is Specialty Compounding’s Managing Partner and co-owner. 

The complaint alleges that Specialty Compounding manufactured a sterile injectable drug product that tested positive for bacterial growth.  In addition, according to the complaint, in August 2013, FDA received reports from two Texas hospitals that 17 patients had developed bacterial infections caused by Rhodococcus equi after receiving infusions of calcium gluconate manufactured by Specialty Compounding.  Specialty Compounding ceased sterile drug manufacturing operations in August 2013, and recalled all lots of its unexpired sterile drug products distributed since Feb. 1, 2013.
“Specialty Compounding’s manufacturing practices posed a serious risk to the public health,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. 

“The American public needs to have the confidence that pharmaceutical drugs on the market are safe and effective.”
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a permanent injunction.  As part of the settlement, the company and its owners have committed to implementing corrective actions before resuming production of sterile drugs.  Specifically, the injunction prohibits Specialty Compounding and its owners from manufacturing, holding or distributing sterile drugs until they comply with the federal Food, Drug, and Cosmetic Act and its regulations.  The permanent injunction also provides the defendants cannot resume distribution of sterile drug products until they receive written approval from the FDA that they are in compliance with the remedial provisions of the permanent injunction.  

As described in the complaint, the FDA inspected Specialty Compounding’s Cedar Park facility in August and September 2013, and found insanitary conditions and numerous violations of the current good manufacturing practice requirements for drug products.  Among other observations, the FDA found that the company was distributing some of their drugs without receiving a valid prescription for an identified individual patient and was introducing into interstate commerce unapproved new drugs and misbranded drugs.  In addition, as alleged in the complaint, analyses of samples of a drug product collected by the FDA found bacterial contamination in one of the company’s drugs.  The company initiated a recall of all injectable drugs on Aug. 9, 2013. 

The government is represented by Trial Attorney Jessica Gunder of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Melissa Mendoza of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.

Valeant Shortcomings Caught By FDA

 

Pharma Manufacturing  reports that the FDA has

posted a warning letter stating that management at

Valeant Pharmaceuticals failed to properly oversee a

contract manufacturer that supplied it with Sculptra

Aesthetic (injectable poly-L-lactic acid). In particular, the

FDA found no evidence that anyone at Valeant had

reviewed and approved the vendor’s deviation report

after the manufacturer stopped production to fix

problems affecting drug quality. The article says that the

FDA “wants to see evidence Valeant has taken steps to

improve its monitoring of CAPAs and review of supplier

deviation reports.” However, Valeant is confident it can

resolve the issues raised and has already divested

Sculptra Aesthetic as part of a deal with Nestle’s

Galderma unit.

Sculptra Aesthetic, a facial injectable that is marketed to smooth wrinkles. The product competes with Juviderm, which is sold by Allergan. Valeant is trying to buy Allergan, which also sells Botox, for $53 billion in conjunction with Pershing Square Capital Management.

 

Nonetheless, the letter raises the possibility that Allergan and its supporters may use the agency warning to support their argument that Valeant cutbacks focus too heavily on areas other than marketing, which may jeopardize R&D or patient safety. Earlier this week, the Allergan board reiterated that the Valeant offer is “grossly inadequate and substantially undervalues” Allergan.

We asked Valeant for comment and will update you accordingly. [UPDATE: Shortly after we posted, Valeant released a statement that says, in part, the warning letter "pertains to the management of Valeant's contract manufacturers, rather than Valeant's own internal manufacturing."  A Valeant spokeswoman adds that Sculptra Aesthetic was sold shortly after the inspection.]