Attorney General William Tong announced a $77,655 settlement with Eastern Connecticut Hematology Oncology Associates, PC (ECHO), resolving allegations that the Norwich practice accepted pharmaceutical rebates barred under Medicaid rules. In 2022, the United States and several states including Connecticut reached a settlement with pharmaceutical distributor Cardinal Health for alleged violations of the Anti-Kickback Statute. That settlement involved Cardinal’s upfront payments or “prebates” to physician practices that entered into exclusive distribution arrangements with Cardinal. These prebates were made in advance of the physician practices’ purchases of pharmaceuticals from Cardinal, and either were not attributable to identifiable sales of pharmaceutical products or were purported rebates that the physician practices had not actually earned. The purpose of these prebates was to induce the physician practices to purchase pharmaceuticals paid for by federal healthcare programs from Cardinal, instead of from Cardinal’s competitors, in violation of the Anti-Kickback Statute.
Following that settlement, the Office of the Attorney General conducted further investigation regarding ECHO. The state investigation found that ECHO had accepted $190,357.16 in up-front “prebates” from Cardinal in exchange for a letter of commitment to purchase 95 percent of its branded and generic pharmaceuticals from Cardinal. Some of those pharmaceuticals were used in the care of patients of the Connecticut Medicaid Program as well as healthcare beneficiaries of the state employee and retiree health programs administered by the Office of State Comptroller. The state investigation did not find any evidence that patient care was harmed or impacted by the prebate agreement.
