ConsumerAffairs.com
By Jon Hood
April 8, 2010

A lawsuit filed last week accuses Johnson & Johnson of conspiring with pharmaceutical consultant Omnicare in an effort to push J&J drugs on nursing home residents, and violating federal Medicaid laws in the process.

As a result of the scheme, “residents were overcharged for their medications, had additional medications administered and were unlawfully switched to Johnson & Johnson drugs,” all in the name of increasing revenue, according to the lawsuit.

The suit, filed in federal court in California, says Omnicare — which “occupies a ‘dual’ role of a dispensing pharmacy and consulting pharmacy” — gave certain J&J drugs “elevated status as the default drug of choice” for thousands of nursing home patients. J&J allegedly gave Omnicare “performance rebates” — essentially kickbacks — in return for its services. This arrangement was memorialized in a 1997 “Supply Agreement” between the two companies, the suit states.

The agreement provided that the two companies would “meet quarterly to review their joint ‘business plan’ and ‘performance goals,'” and came up with a novel way to deal with the performance-rebates: they would be treated as year-end bonuses.

The drugs allegedly targeted for promotion under the agreement included Floxin, Levaquin, Risperdal, Ultram, Duragesic, Procrit, and Aciphex.

The suit contends that under the agreement, J&J paid to have its drugs labeled as “preferred” — a status that Omnicare purportedly confers on drugs that receive high marks “for their clinical effectiveness in the geriatric community.”

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