In a press release dated January 15, 2010, the United States announced that it had filed a civil complaint against Johnson & Johnson and two of its subsidiaries alleging that the companies paid millions of dollars in kickbacks to Omnicare, Inc., the nation’s largest nursing home pharmacy. In the complaint, the United States alleges that Johnson & Johnson paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend Johnson & Johnson drugs, including the anti-psychotic drug Risperdal, for use in nursing homes. According to the United States, Johnson & Johnson knew that Omnicare’s pharmacists reviewed nursing home patient charts at least monthly and made recommendations to those patients’ physicians on what drugs should be prescribed. The government also alleged that Johnson & Johnson knew that the physicians accepted the Omnicare pharmacists’ recommendations more than 80 percent of the time. The United States alleged that, in order to induce Omnicare and its pharmacists to recommend Johnson & Johnson drugs to the physicians in the nursing homes, Johnson & Johnson paid kickbacks to Omnicare, including increased rebates, payments for “data” that were never provided, and “grants” and “educational funding” whose true purpose was to induce Omnicare to recommend Johnson & Johnson drugs.

This case is related to a previous settlement that the United States entered into with Omnicare in November 2009 pursuant to which Omnicare agreed to pay $98 million to resolve its liability under the False Claims Act for taking kickbacks from Johnson & Johnson.

As this lawsuit shows, the government is willing to pursue both parties involved in kickbacks, both the receiver and the payer of the kickbacks. Healthcare providers should be cautious in accepting payments of any kind, regardless of how they are described, from drug companies or other organizations or entities with which they have any kind of referral relationship. The government and your competitors are watching.