Cardinal Health to pay $13 million to resolve U.S. kickback case

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BOSTON (Reuters) -Drug distributor Cardinal Health Inc (NYSE:CAH) has agreed to pay more than $13 million to resolve allegations it gave doctors kickbacks to buy pharmaceutical products paid for by federal healthcare programs, the U.S. Justice Department said on Monday.

U.S. Attorney Rachael Rollins (NYSE:ROL) in Boston said the Ohio-based drug distributor violated the False Claims Act by paying kickbacks to physician practices in the form of “upfront discounts.”

Cardinal Health acknowledged certain facts as part of the $13.125 million settlement, Rollins’ office said, though the company in a statement noted that it did not admit liability as part of the deal.

It said it no longer offers the term-based up-front discounts at issue in the settlement.

The Justice Department said that Cardinal Health since 2013 had made payments to physician practices in advance of them buying any drugs that failed to comply with government restrictions on upfront discount arrangements.

Under the Anti-Kickback Statute, drug distributors are prohibited from offering or paying any compensation to convince doctors to purchase medications for use on patients covered by the government’s Medicare health insurance program.

The Office of Inspector General for the U.S. Department of Health and Human Services has said distributors may legally offer commercially available discounts to customers under certain circumstances.

But the department said Cardinal’s payments did not meet those requirements because they were not attributable to identifiable sales of pharmaceutical products or purported rebates that the customers had not actually earned.