AG Frosh: Maryland Helps States and Federal Government Recoup $9.25 Million in Prescription Drug Medicaid Fraud Scheme PharMerica Corp

AG Frosh: Maryland Helps States and Federal Government Recoup $9.25 Million in Prescription Drug Medicaid Fraud Scheme PharMerica Corp. Pays To Settle Kickback Charges

Baltimore, MD -Attorney General Brian E. Frosh announced today that Maryland has joined with other states and the federal government to settle kickback allegations against the nation's second-largest institutional pharmacy, PharMerica Corp.

The allegations stem from a scheme involving drug manufacturer Abbott Laboratories and its anti-seizure drug, Depakote. The states and federal government claim that PharMerica solicited and received illegal compensation from Abbott, in exchange for promoting or purchasing Depakote, frequently for "off-label" uses and in improper dosages. The payments were in violation of the federal Anti-Kickback Statute, and, as a result, the states contend that PharMerica knowingly caused false claims to be submitted to federal and state Medicaid programs.

"This case started because whistle-blowers did the right thing and shined a light on a disturbing scheme that exploited vulnerable patients," said Attorney General Frosh. "Putting profits ahead of patient needs is unacceptable."

In 2012, Maryland, various other states and the federal government reached a $1.5 billion settlement with Abbott over illegal marketing of Depakote, which at the time was the second-largest recovery from a pharmaceutical company. Among the complaints against Abbott: that it improperly marketed Depakote to promote usage to help keep patients in nursing homes calm, even if they were not suffering seizures; and that it paid kickbacks to long-term care pharmacy providers, including PharMerica.

As part of the settlement being announced today, the federal government will receive $6.7 million for Medicaid and Medicare programs, with states receiving $2.5 million. Maryland's share of the settlement is $61,990, based on the amount of Depakote purchased in the state.

A state team appointed by the National Association of Medicaid Fraud Control Units participated in the investigation and conducted the settlement negotiations with PharMerica on behalf of the participating states. In addition to Maryland, team members include representatives from the Offices of the Attorneys General for the states of California, Illinois, Massachusetts, New York, Ohio, South Carolina and Virginia.

Attorney General Frosh thanked Assistant Attorney General Shelly Marie Martin, Medicaid Fraud Control Unit chief auditor Ruth Jarrell and Medicaid Fraud Control Unit investigative auditor Carol Kelly for their work on this case.