WASHINGTON – The United State’s largest nursing home pharmacy, Omnicare, Inc., of Covington, Ky., will pay $98 million to settle allegations that the company ran several kickback schemes, according to the Justice Department.

In addition, The drug manufacturer IVAX Pharmaceuticals of Weston, Fla., a unit of Teva Pharmaceutical Industries, Ltd., will pay $14 million to settle allegations that it paid $8 million in kickbacks in exchange for Omnicare's agreement to buy $50 million worth of IVAX drugs.

Approximately $68.5 million of the settlement proceeds will go to the United States, while $43.5 million has been allocated to cover Medicaid program claims by participating states.

"Omnicare and other nursing home pharmacies specialize in providing drugs to elderly patients who are often suffering from Alzheimer’s disease or dementia and who have little or no control over the drugs they receive," said Michael Loucks, Acting U.S. Attorney for the District of Massachusetts. "Today’s settlement provides a strong message to these pharmacies, as well as to pharmaceutical companies and nursing homes, that the government will not tolerate the payment of kickbacks which can distort proper medical judgment and put profits ahead of good medical care."

According to the Justice Department, Omnicare allegedly paid kickbacks to nursing homes by providing consultant pharmacist services in order to induce the homes to refer their patients to Omnicare for pharmacy services.

"Illegal conduct like this can undermine the medical judgments of healthcare professionals, lead to patients being prescribed medications they do not need and drive up the costs of healthcare," said Tony West, assistant attorney general for the Civil Division of the Justice Department.

As part of the settlement, Omnicare and IVAX have agreed to enter into separate corporate integrity agreements with the Office of Inspector General of the Department of Health and Human Services.

Justice officials are also claiming Omnicare solicited and received kickbacks from pharmaceutical manufacturer Johnson & Johnson in exchange for agreeing to recommend that physicians prescribe J&J's Risperdal, an antipsychotic drug, to nursing home patients. Officials said J&J’s kickbacks to Omnicare took multiple forms, including rebates that were conditioned on Omnicare engaging in an "Active Intervention Program" for Risperdal and payments disguised as data purchase fees, educational grants and fees to attend Omnicare meetings.

The Justice Department, in a two-page court filing Tuesday, said it expects to make a decision soon on whether to intervene in a lawsuit that made the allegations against J&J.