Drug distributor to pay $13 million to settle bribery allegations

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BOSTON (AP) — Pharmaceutical distributor Cardinal Health Inc. has agreed to pay more than $13 million to resolve allegations that it violated federal law by paying bribes to certain doctors’ offices, announcing federal authorities on Monday.

Cardinal Health has incentivized medical practices to buy drugs from Cardinal rather than competitors by paying those practices before any drug purchases, not in connection with specific purchases, according to the settlement.

These upfront payments, “either were not attributable to identifiable pharmaceutical sales, or were purported discounts that customers did not actually earn,” the settlement says.


A voicemail requesting comment was left with a spokesperson for Cardinal Health, based in Dublin, Ohio.

The payments were a violation of the Anti-Kickback Act, which prohibits pharmaceutical distributors from offering or paying compensation to induce doctors to buy drugs for Medicare patients, authorities said.

“Cardinal Health thought it had found a surefire way to make money by kickbacking doctors, which cost health benefit programs millions of dollars in potentially fraudulent claims,” said Joseph Bonavolonta, special agent in charge of the FBI office in Boston in a press release.

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

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

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

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