August 25, 2004

AUGUST 25, 2004



            Attorney General Steven Rowe today announced that the State has settled serious charges over illegal drug switching by Omnicare of Maine, a Gardiner-based pharmacy that serves clients in long-term care facilities statewide.  Rowe alleges that Omnicare of Maine violated the False Claims Act, the Unfair Trade Practices Act, and the Maine Pharmacy Act by switching patients from the prescribed ranitidine tablets to unprescribed ranitidine capsules.  Most cases involved the 150 mg dosage, for which MaineCare (Maine’s Medicaid program) paid $15.10 per month in tablet form and $82.77 per month in capsule form.  Ranitidine is the generic form of Zantac, and it is a very common anti-ulcer drug.  Omnicare of Maine will pay $1,080,000 in fines, damages, and costs to settle the case.

            The drug switches were initiated specifically to increase revenue to Omnicare of Maine.  The so-called “Ranitidine Initiative” at Omnicare was developed to lessen the impact of a June, 2000, federal capping of the Medicaid reimbursement rate for ranitidine tablets.  The reimbursement rate for capsules was not capped.

            On March 1, 2000, almost 90% of Omnicare of Maine’s MaineCare patients receiving Ranitidine were receiving the tablet form, and less than 5% were receiving the capsules.  By May 31, 2000, 95% of that group was on the capsules.  Capsules and tablets are not therapeutic equivalents, so switching from one to the other requires physician authorization under the law. 

            In most cases, Omnicare of Maine attempted to get the required physician authorization only after the fact.  In at least 267 cases, it created false telephone prescription orders and sent them to the residential care facility with an attached memo that directed facility staff, “Per Geriatric Pharmaceutical Care Guidelines and permission from the prescribing prescriber, this resident’s order has been changed.  A telephone order is attached and must be processed at your facility as any other prescriber order.”  Omnicare of Maine also sent out letters and faxes to prescribers, recommending the switch and falsely advising that the switch would “forward cost effectiveness to the payer. . . .of the pharmacy bill.”  Seventy-three prescribers did not respond to the letters, but Omnicare of Maine continued to dispense capsules to their patients without a valid prescription.  Eighteen prescribers specifically responded “no” to the letters, but capsules were dispensed anyway.  In the end, Omnicare of Maine filed 2,129 claims for reimbursement for prescriptions that were illegal because prescribers either did not authorize them or authorized them based on misrepresentations.  MaineCare paid approximately $136,935 for those prescriptions.

            The settlement breakdown is as follows: Restitution and interest to MaineCare, $198,188; False Claims Act penalties, $614,740 to MaineCare; False Claims Act attorney’s fees and investigative costs, $30,500 Healthcare Crimes Unit; Unfair Trade Practices Act penalties to State, $180,000.  In addition, Omnicare of Maine will pay restitution of approximately $60,000 directly to private payers harmed by the illegal switching.  The company also agreed to remain under constant monitoring by its parent company’s compliance officer, to conduct training of its employees, to refrain from switching drugs for MaineCare patients without prior approval of the Maine Department of Health and Human Services, and to report annually to the Attorney General’s Office about its compliance with this settlement.

            Attorney General Rowe said, “I have been outraged by this case all along.  We all trust that pharmacists will communicate honestly with doctors, especially about the care of our vulnerable family members and friends in nursing homes.  I am outraged by the violation of that trust.  I am also outraged by the deliberate defrauding of MaineCare.  The price of this case to this pharmacy says a million times over that the people of Maine will not stand by as our insurance program for our most vulnerable citizens is exploited by greedy providers.”

            Rowe commended the exceptional work of the Maine Healthcare Crimes Unit within the Attorney General’s Office, especially Assistant Attorney General Marci Alexander and Detective Christine Baker.

* * * * *