Supreme Court to hear case sparked by Omnicare deals
U.S. Supreme Court
A recent $4 million legal settlement over kickbacks for anemia drug Aranesp is small change compared to other recent deals Omnicare has made with federal authorities. News of these payouts hasn't escaped long-term care pharmacy investors, some of whom filed their own charges against the pharmacy provider, launching a case that is now set to be heard by the U.S. Supreme Court.
At issue is a Securities and Exchange Commission statement that Omnicare issued prior to a stock offering in 2005, which noted that all the company's contracts were legal. Since then, Omnicare entered into several legal settlements over false claims and kickback charges. In one deal, Omnicare agreed to pay $120 million over whistleblower claims that it discounted certain drugs to nursing homes in exchange for referrals.
Upon learning of alleged kickbacks, an investor group that bought stock in 2005 sued Omnicare, charging that the SEC statement was false and misleading. A district court dismissed the case, citing that Omnicare hadn't knowingly made false statements. An appeals court disagreed, saying the case should stand if Omnicare made untrue statements, even if it believed the statements were true at the time. The Supreme Court has agreed to hear the case in its next term.
In another recent case, Omnicare came away with a victory. A former employee brought False Claims charges, stating that an Ohio facility housed a drug repackaging plant and a pharmacy where penicillin and non-penicillin drugs were handled, threatening cross-contamination. The allegations were investigated by the Food and Drug Administration, leading to changes.
Courts have ruled the whistleblower charges do not relate to false claims. A district court dismissed the case and a federal appeals court upheld that decision Feb. 21.