False Schizophrenic Diagnoses Drive Antipsychotic Drug Dispensing In Nursing Home

A pharma-created culture of prescribing antipsychotic drugs off-label to dementia patients in nursing homes is still happening today, according to a new report from the Office of the Inspector General (OIG). The OIG report revealed that some nursing homes intentionally and wrongfully diagnosed residents as having schizophrenia so they could give anti-psychotic medications without negatively impacting their star rating. The OIG report included an investigation of 40 nursing homes, but the authors did not state how many of them engaged in the practice.

In 1999, Eli Lilly began promoting the use of its Zyprexa antipsychotic drug for off-label use for dementia patients and specifically marketed it to doctors who treat elderly nursing home patients. The company pleaded guilty to a misdemeanor criminal charge with fines and settlements totaling $1.415 billion. That includes a criminal fine of $515 million, the largest corporate criminal fine at the time in 2009.

In 2002-2003, Johnson & Johnson paid kickbacks to Omnicare, Inc., the largest pharmacy specializing in providing medications to nursing home patients, in exchange for promoting its antipsychotic drugs to elderly patients. In 2013, the company paid a total of $2.2 billion in fines and settlements and allegedly saw Omnicare as an “extension of J&J’s sales force.”

Pfizer paid a $2.3 billion global settlement in 2009, Bristol-Meyers Squibb paid a $19.5 million settlement in 2016, and AstraZeneca paid a $520 million settlement in 2010, all for marketing antipsychotic drugs for off-label uses, including for patients with dementia. As CMS has attempted to take action on this issue over the last two decades, nursing homes have adapted their practices to continue utilizing antipsychotic drugs as a chemical restraint for dementia patients.

The Centers for Medicare & Medicaid Services (CMS) added an evaluation of antipsychotic medication use to its star rating system in 2015 to incentivize assisted living facilities to use fewer antipsychotic medications. Residents diagnosed with schizophrenia are not included in the percentage used to evaluate the home’s star rating. As a result, some nursing homes have created policies to diagnose residents with schizophrenia if they are receiving any form of anti-psychotic medication.

This issue is not new, and it has only worsened over the last 15 years. In 2011, an OIG report found 14% of nursing home residents were receiving anti-psychotic drugs for off-label use. The OIG report evaluated a six-month period in 2007, during which 51% of Medicare claims for atypical antipsychotic drugs were erroneous, totaling $116 million in errors.

The Committee on Ways and Means evaluated the prescriptions of antipsychotic drugs in assisted care facilities in 2019. The report says approximately 20% of all residents received some form of antipsychotic medications in the fourth quarter of 2019, but one 2% had qualifying conditions to be receiving those drugs.

The Nursing Home Reform Act of 1987, signed into law by President Ronald Reagan, grants residents rights that continue to be violated. “The resident has the right to be free from abuse, neglect, misappropriation of resident property, and exploitation as defined in this subpart. This includes but is not limited to freedom from corporal punishment, involuntary seclusion, and any physical or chemical restraint not required to treat the resident’s medical symptoms.”

Antipsychotic drugs should not be improperly used as a form of chemical restraint for purposes of discipline or convenience, according to CMS guidelines. The FDA has not approved antipsychotic medications for use in dementia patients, and these drugs include the most serious black box warning to avoid use in dementia patients. There is a higher risk of death for dementia patients who take these medications, but the “vast majority” of antipsychotic drugs given in nursing homes are given to dementia patients, according to the OIG report.

While the 1987 act required patient consent, there was no clear requirement for the facility to obtain written consent. CMS made revisions at the end of 2024 that went into effect in February 2025 and require written consent from the patient or the patient’s representative. The newly released OIG report said families were not informed of the schizophrenia diagnoses, including an example of a family member who accompanied the patient during every VA appointment.

A 2024 study in JAMA showed a number of other risks associated with antipsychotic medications for patients with dementia. Researchers found a 1.3 to 2.2-fold increased risk of pneumonia, acute kidney injury, venous thromboembolism, stroke, myocardial infarction, and heart failure.

While the CMS guidelines do not allow the use of chemical restraints for convenience, a 2024 study found that nursing homes experiencing staffing shortages are more likely to give their patients antipsychotic drugs. Severely deprived neighborhoods that fell below critical staffing levels inappropriately prescribed antipsychotic medications 19.2% compared to 17.1% in less deprived neighborhoods.

CMS has been trying to resolve the issue of improperly giving antipsychotic drugs to elderly dementia patients for two decades, after some of the largest pharmaceutical companies encouraged nursing homes to dangerously prescribe these drugs off-label despite the known risks. Now that the companies have paid their settlements for the fraudulent marketing, they are still reaping the rewards of the increased sales, as nursing homes have implemented the drugs as a form of “chemical restraint” for convenience and to make up for staffing shortages. Assisted care facilities have found new ways to work around CMS guidelines to continue using these medications in improper ways.