Drug distributor to pay $13M to settle kickback allegations

Pharmaceutical distributor Cardinal Health Inc. has agreed to pay more than $13 million to resolve allegations that it violated federal law by paying kickbacks to some doctors' offices, federal authorities said Monday.

Cardinal Health induced physician practices to buy medications from Cardinal rather than from competitors by paying those practices in advance of any drug purchases, and not in connection with any specific purchases, according to the settlement.

Those upfront payments “either were not attributable to identifiable sales of pharmaceutical products or were purported rebates that the customers had not actually earned,” the settlement said.

A voicemail seeking comment was left with a spokesperson for Dublin Ohio-based Cardinal Health.

The payments were a violation of the Anti-Kickback Statute, which prohibits pharmaceutical distributors from offering or paying compensation to induce physicians to purchase drugs for use by Medicare patients, authorities said.

“Cardinal Health thought it hit upon a surefire moneymaker by paying kickbacks to doctors, which cost health benefit programs millions of dollars in potentially fraudulent claims,” Joseph Bonavolonta, special agent in charge of the FBI’s Boston office said in a statement.

The payments were made to more than three dozen physician practices across the nation from February 2013 until mid-January, authorities said.

The settlement resolves allegations originally brought in lawsuits filed by whistleblowers under a legal provision that allows private parties to sue on behalf of the government and to share in any recovery. Those whistleblowers will receive about $2.6 million of the settlement.

“Cardinal Health recruited new customers by offering and paying cash bonuses in violation of the Anti-Kickback Statute and False Claims Act. Kickback schemes, such as this one, have the potential to pervert clinical decision making and are detrimental to our federal health care system and taxpayers,” said Rachael Rollins, U.S. attorney for Boston.