Dive Brief:
- CVS Health and its Omnicare pharmacy subsidiary agreed to pay at least $440 million to the Department of Justice last week to satisfy a judgment for fraudulently billing government healthcare programs.
- Last year, a federal judge ordered the long-term pharmacy services provider to pay $948.8 million in penalties and damages for filling millions of false claims over eight years. But Omnicare filed for bankruptcy months later, citing billions of dollars of debt.
- The settlement isn’t an admission of liability or wrongdoing, but it will save the time and expense of continuing litigation, a CVS spokesperson said in a statement Thursday. “We’re pleased to put this matter behind us as part of a successful conclusion of the Omnicare chapter 11 case,” they said.
Dive Insight:
If approved by the court, the deal could signal the end of a long legal saga for Omnicare, which was acquired by CVS in 2015. A former pharmacist at the firm accused Omnicare of improperly billing Medicare, Medicaid and the military insurance program Tricare for medications without valid prescriptions more than a decade ago.
The DOJ later joined the lawsuit, and a jury last year found Omnicare liable for fraudulently dispensing drugs. A federal judge ordered the company to pay a $542 million penalty plus $406.8 million in damages.
Shortly after appealing in September, the company filed for Chapter 11 bankruptcy. In March, the DOJ filed a claim in Omnicare’s bankruptcy case over the judgment, representing “the single largest claim” against Omnicare’s estate and “critical to the Debtors’ restructuring efforts and the recoveries available to other creditors,” according to a filing in bankruptcy court for the Northern Division of Texas.
Now, the DOJ, CVS and Omnicare have reached a deal. CVS is required to pay $130 million to the government within two weeks of the final agreement, with $310 million due by the end of March 2028.
The agreement is the result of “extensive, good faith, arms-length negotiations” and will help push a deal to sell Omnicare across the finish line, according to the court filing.
The court approved a plan in May to sell Omnicare to GenieRx, which is operated through a partnership between private equity firm Milrose Capital and healthcare investment and management company Integro Asset Management. The sale is expected to close this year.
A hearing on the Omnicare settlement is scheduled for Aug. 12.
