PharMerica and the terrible, horrible, no good, very bad year
When I was a kid, one of my favorite books was "Alexander and the Terrible, Horrible, No Good, Very Bad Day." The protagonist, Alexander, is forced to confront a string of juvenile atrocities in one, long unpleasant day, among them: Waking up with gum in his hair, managing the devastation of being a "third best friend," and opening his lunch box to find his mom forgot to pack dessert. With each layer of childhood disappointment and frustration, Alexander threatens to move to Australia.
PharMerica Corp, the second-largest pharmacy operator in the country, is having the longer, corporate version of Alexander's day, stretched out over the course of a year. Instead of finding a cookie-less lunch, PharMerica had to pay $43.25 million in False Claims Act (FCA) settlements in 2015.
When PharMerica began the year, the company was facing three separate lawsuits from the federal government alleging FCA and kickback violations linked to an anemia drug, an anti-seizure drug and Schedule II narcotics. It had all the makings of a terrible, horrible, no good, very bad year.
By May, PharMerica had settled one of those cases, writing a $31.5 million check to the government for routinely dispensing Schedule II drugs in non-emergency situations without a written prescription, and allowing nurses to order and dispense medications without physician approval. Among the Schedule II drugs given to long-term care residents were highly addictive pain medications such as oxycodone and fentanyl. It was the third time that PharMerica had settled claims for dispensing Schedule II painkillers without a prescription in the last 18 months.
Even worse, PharMerica had to sign another five-year corporate integrity agreement with the Office of Inspector General--after signing one in 2005--promising to hire a compliance officer and create a compliance committee and a Controlled Substances Policy Task Force.
I imagine the thought of moving to Australia--just like the fictional Alexander--started to sound appealing to PharMerica.
Then, in October, PharMerica agreed to pay $9.25 million to settle allegations that the company took kickbacks from Abbott Laboratories to promote an anti-seizure medication called Depokate. Abbott had already paid $1.5 billion in 2012 for claiming Depakote was safe and effective for treating aggression in elderly dementia patients.
I can picture PharMerica responding like this:
"We didn't do it! The payments were just rebates and educational grants." But no one listened.
"What are the kickback laws in Australia?" the company said, to no one in particular.
Then, just as the year was coming to a close, PharMerica finalized negotiations for taking kickbacks to promote an anemia drug called Aranesp, agreeing to pay $2.5 million--not bad, considering the drug's manufacturer Amgen, had already paid $762 million for misbranding the drug.
"Until we correct the situation where large healthcare organizations are repeatedly willing to risk Medicare fraud for a 'slap on the hand' in return for millions, sometimes billions, in profits, we have little hope of improving this situation," whistleblower Frank Kurnik told the Kentucky Center for Investigative Reporting.
"We don't want to talk about it," I imagine PharMerica muttering, packing its things for Australia.
Then PharMerica looked at its 2015 earnings and saw that revenue had increased 10 percent, and gross profit had increased 1.4 percent through the third quarter. Plus it heard a rumor that you can write off fraud settlements.