Court expresses concern over Omnicare drug packaging practices but dismisses False Claims suit

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A whistleblower exposed disturbing drug packaging practices being used by long-term care pharmacy Omnicare Inc., but the charges don't fall under the False Claims Act, a federal appeals court recently ruled.

The claims involve an Omnicare facility in Toledo, OH. The building housed a drug repackaging facility as well as an Omnicare pharmacy, according to court documents. In violation of Food and Drug Administration regulations, both penicillin and non-penicillin drugs were being packaged there, leading to cross-contamination, according to the charges brought by former Omnicare employee Barry Rostholder.

Rostholder's suit was brought under the False Claims Act. He argued that the contaminated drugs were not eligible for Medicare and Medicaid reimbursement, even though many went to nursing homes and presumably were paid for through these government programs.

A district court dismissed the case. A federal appeals court upheld the decision on Feb. 21.

“The relevant statutes do not provide that when an already-approved drug has been produced or packaged in violation of FDA safety regulations, that particular drug may not be the proper subject of a reimbursement request under Medicare and Medicaid,” the judges wrote in their ruling.

The court emphasized that the ruling is not meant to “condone” the FDA violations that “apparently occurred” in this case.

After receiving a warning letter about the packaging practices from the FDA in 2005, Omnicare disposed of $19 million in inventory, according to the court brief. The company did not issue a recall for any drugs for suspected penicillin contamination.

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