One of the nation’s leading pharmacy companies has agreed to pay $100 million to resolve allegations of false claims and kickbacks in its dealings with long-term care providers.
The legal claims against PharMerica have been ongoing in the District Court of New Jersey since 2011, when whistleblower Marc Silver accused the company of undercharging skilled nursing facilities for their Medicare Part A patients in order to secure more lucrative Medicare Part D and Medicaid contracts.
A report on the nine-figure settlement from law firm Berger Montague, described this alleged improper practice as “swapping” — comparing it to “loss leader” tactics used by some large companies in other industries to outcompete their rivals and secure a larger market share.
Lawyers representing the plaintiff made the announcement Wednesday although the case was officially dismissed on July 3, according to court documents.
A PharMerica representative said that the company operates consistent with government rules and is ready to move past the long-running legal battle in a statement provided to Mcknight’s Long-Term Care News Thursday.
“We are pleased to put this previously disclosed matter from many years ago behind us,” the official statement read. “At PharMerica, we comply with federal and state regulations, evaluating our policies and procedures on an ongoing basis to ensure we always operate in the best interests of the customers and patients we serve.”
Sherrie Savett, lead counsel for the plaintiff and executive shareholder at Berger Montague, claimed to McKnight’s that the pharmacy was able to use kickbacks to unfairly boost its market share. She estimated that this alleged practice was occurring at 175 nursing homes between 2005 and 2014 — a number she described as a small, but still “very significant” portion of the thousands of facilities PharMerica contracted with at the time.
Savett told McKnight’s she hopes this settlement will have a positive impact on fairness in the world of long-term care drug pricing.
“The defendant denied that they did it. This was a heavily disputed, heavily litigated case and the settlement was a compromise as all settlements are,” she explained. “But we were very pleased with the result and hope that it will have a positive impact on the industry in terms of how these drugs are priced and that more pharmacies will stay within the confines of the law.”
Of the total settlement, more than $70 million will go to federal and state governments. Silver — a former skilled nursing facility and pharmacy owner — will also receive a reward payment.
