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Bergen Brunswig Unit Under Investigation

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From Bloomberg News

Bergen Brunswig Corp., the third-largest U.S. drug wholesaler, said Hawaii regulators are investigating suspected Medicaid fraud at a pharmacy operated by its PharMerica unit.

The Orange-based company said in a document filed Monday with regulators that Hawaii’s Medicaid fraud division is conducting the investigation of a Bergen Brunswig pharmacy in Honolulu.

Bergen bought PharMerica in April for $1.1 billion in stock and cash to expand its sales to nursing homes. The acquisition came at the same time that Medicare, the federal health insurance plan for the elderly, was reducing payments to nursing homes, among other health-care providers.

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The performance of PharMerica as well as that of Stadtlander Drug Co., a specialty-drug distributor Bergen acquired last year, have hurt Bergen’s earnings.

“The company is also conducting an internal investigation in conjunction with the state,” Bergen said in its filing. “At this stage of the investigation, the company is not able to determine the probable outcome of the investigation, including any possible resulting liability.”

One of PharMerica’s customers, Integrated Health Services, which operates more than 1,700 nursing homes and rehabilitation centers in the U.S., filed for Chapter 11 bankruptcy protection Feb. 2.

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Bergen, in its own regulatory filing, called IHS a “significant customer” but said it was too early to determine whether the IHS filing would result in any loss to Bergen.

Shares of Bergen rose 69 cents Monday to close at $5.63 in trading on the New York Stock Exchange. The shares have fallen 79% in the past 12 months.

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