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OIG seeks largest-ever civil monetary penalty against PharMerica

Compliance Monitor, June 30, 2004

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On June 17, the OIG announced it is seeking the largest amount of money to date in a civil monetary case by issuing a demand letter to one of the nation's largest institutional pharmacies, PharMerica Drug Systems, Inc., based on alleged kickback violations.

The demand letter launches a formal process to seek $21.8 million in civil monetary penalties and damages as well as a 10-year exclusion from participation in federal health programs.

PharMerica, based in Tampa, caters to the elderly population.

According a statement from the OIG, it alleges that PharMerica agreed to purchase a small Virginia pharmacy for an "excessive amount" in return for a commitment from the sellers who agreed to refer their Medicaid patients' pharmacy business to PharMerica for the next seven years. The sellers also owned 17 nursing homes and eight assisted living facilities.

The statement says the purchase price for the pharmacy-which had virtually no operating history-was $7.2 million.

The OIG charged that the agreement violated the anti-kickback statute's prohibition on the payment of remuneration to induce the referral of federal health care patients or business.

To read the OIG's statement, click here.

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