Johnson & Johnson Under Scrutiny for Illicit Drug Payoffs, Kickbacks
March 24, 2010
By David Gutierrez
The U.S. Justice Department has announced that it is investigating pharmaceutical giant Johnson & Johnson for paying kickbacks to pharmacy benefits manager Omnicare.
Pharmacy benefits managers are supposed to negotiate on behalf of health plans and their customers to secure lower prices from drug companies and pharmacies. Yet according to the Justice Department, Omnicare took millions of dollars in payments from companies such as giant Johnson & Johnson in exchange for promoting their drugs.
“Patients have a right to depend on the integrity of the medical advice they’re getting,” said assistant attorney general Tony West. “When kickbacks are involved, the medical judgment of the provider is corrupted.”
Omnicare recently agreed to a $98 million settlement in the Justice Department lawsuit against it, while IVAX pharmaceuticals agreed to pay $14 million. According to prosecutors, IVAX paid Omnicare $8 million to recommend its generic drugs to nursing homes and their patients.
The government alleges that Johnson & Johnson also paid such kickbacks, in order to get Omnicare to promote its antipsychotic drug Risperdal and discourage doctors from prescribing alternative drugs.
Observers and insiders say that the practice of paying kickbacks is widespread in the drug business.
“Almost invariably if we see one practice in one company, it’s happening at other companies,” U.S. Attorney Mike Loucks said.
According to Brian Smith, president of pharmacy benefits manager Veritas, the practice was open and accepted within the business when he entered it in 2002.
“I thought it was just the industry standard,” he said.
Patrick Burns of Taxpayers Against Fraud says that kickbacks are one of the main ways that pharmacies get an edge on competitors who are selling fundamentally similar products.
“In the pharmaceutical industry, the business isn’t selling the best drug, it’s the best scheme of kickbacks to the prescriber,” Burns said. “Omnicare is just one of their sales points.”