United Pharmacy Partners, a trade group representing nuclear pharmacies, filed a whistleblower lawsuit against Cardinal Health alleging it illegally avoided competition to gain government contracts that are typically reserved for small businesses owned by disabled veterans.
The lawsuit was originally filed in 2017 but was unsealed Aug. 24 after the U.S. Justice Department declined to join the case, STAT reported.
Nuclear pharmacies purchase radiology medicines and fill orders from hospital radiology departments. Hospitals use radiology drugs to highlight images displayed in kidney and lung scans, according to STAT.
The trade group said Cardinal used front companies designated as service-disabled veteran-owned small businesses to avoid competitive bidding for government contracts to supply radiopharmaceuticals. The front companies were unable to perform the work required by the contracts, but Cardinal allegedly did most of the work and received nearly all of the proceeds.
The front companies kept a share of the proceeds, essentially a kickback for allowing Cardinal to bypass competition, the trade group said.
"The result is that Cardinal — a health care behemoth — made millions from contracts set aside for small businesses," the lawsuit said.
A Cardinal spokesperson told STAT the company is "pleased" that the Justice Department chose not to participate in the lawsuit.
"Cardinal Health has been transparent throughout the contracts in question and operates in strict accordance with all applicable state and federal regulations in its preparation and distribution of radiopharmaceuticals," the spokesperson said.