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Pharmaceutical Fraud
Compounding Pharmacy Fraud:
How Does it Work?
Is your pharmacy or other healthcare organization engaged in illegal practices involving pharmaceuticals compounds? If so, you may be needed to serve as a whistleblower. Your action may prevent patients from being harmed or the public from being defrauded.
Whistleblowers play an essential role in bringing these cases to the attention of investigators. These types of claims are typically involved public programs and may be covered by the False Claims Act (FCA).
In addition to providing enhanced penalties for fraud, this act allows some whistleblowers to serve as “relators.” Relators sue on the government’s behalf and may be allowed to collect a portion of the funds that are recovered. In some cases, this portion amount to millions of dollars.
It’s wise to speak to a lawyer before you blow the whistle on pharmacy practices. The information below can help you understand what issues may be involved with compounding pharmaceutical fraud cases.
Table of Contents
- What is compounding pharmacy fraud?
- What is TRICARE compounding pharmacy fraud?
- What are some recent examples of compounding pharmacy fraud?
- How to report compounding pharmacy fraud
What is compounding pharmacy fraud?
Compounding pharmacy fraud is a type of fraud that involves the use of compounded drugs. Compounded drugs are created from the combining, mixing, or altering of existing medications to create a drug designed to serve a specific patient or situation.
For example, if a patient is incapable of ingesting a drug as a pill, the active ingredients can be compounded into a different form that can be applied as a cream.
The potential for fraud comes from the fact that many insurance plans and public programs pay substantially higher rates for “new” drugs. Compounded drugs are not new drugs and may involve common, generic ingredients. When compounded drugs are falsely recorded or charged as new drugs, it may constitute fraud.
Pharmacy fraud is a serious issue across the entire healthcare market. However, in recent years, the public program TRICARE has been targeted by this type of fraud more than other insurance programs.
What is TRICARE compounding pharmacy fraud?
TRICARE is a health insurance program that acts as a payor uniformed service members, retirees, and their families. Compared to other public programs, it had lenient rules in place for what qualified as compounded medications. It also did not require FDA approval for compounded medications.
Due to these policies, the program was repeatedly targeted by unethical pharmaceutical companies who compounded relatively affordable medications into vastly more expensive ones. Due to the lucrative rewards of this fraud, service members were harassed with advertising meant to drive them toward these compounded medications.
Whistleblowers have helped to curtail this practice. One whistleblower was recently rewarded with nearly $100,000 for their role in exposing this practice at one pharmacy. Unfortunately, there are many more recent examples.
Recent examples of compounding pharmacy fraud
In recent years, the department of justice has stepped up enforcement of compounding pharmacy fraud.
- Ademola O. Adebayo, 55, of Odessa, Florida, was recently sentenced to 10 years in prison for his part in a compounding pharmacy scheme that defrauded private insurers, Medicare, and TRICARE out of more than $120,000,000.
He was also slapped with other charges related to the fraud, including wire fraud and conspiracy to commit money laundering. Multiple others were charged in connection with the scheme, with sentences ranging between 12 and 66 months.
No whistleblower was announced to have participated, so the millions that were paid in fines or seized in forfeiture passed to the government.
- Wade Ashley Walters, 54, of Hattiesburg, Mississippi, was recent sentenced to 18 years in prison for his role in a compounding pharmacy scheme that prosecutors described as “the largest healthcare fraud scheme in Mississippi history” involving his pharmaceutical distribution company.
He was accused of running a massive fraud scheme that earned money by distributing compounded medications that weren’t medically necessary. The scheme allegedly defrauded the TRICARE program of more than $287,000,000.
In addition to the prison sentence, Wade was ordered to pay $287,659,569 in restitution. He also forfeited $56,565,963 to cover the amount he personally derived from the scheme.
- David M. Fulkerson, 48, of Indiana, and Nathaniel Stewart III, 38, of South Carolina recently pled guilty to a series of charges related to a multimillion-dollar scheme involving compounded prescription drugs.
They were charged with defrauding health care benefit programs by marketing compounded medications that were medically unnecessary. In some cases, they coached patients on how to request the company’s compounded medications.
The charges were partially resolved in a plea agreement under which the defendants agreed to forfeit more than $750,000 each and pay $4,000,000 in restitution.
How to report compounding pharmacy fraud
You can help to end compounding pharmacy fraud. Start by speaking to a pharmacy fraud lawyer who can take you through the whistleblowing process. Depending on the details of the case, your lawyer may recommend that you report fraud to the Centers for Medicare & Medicaid Services.
Be careful about reporting fraud to any authority before speaking to a lawyer. You may lose your right to act as a relator in the case. Your lawyer may also have advice on what evidence you should collect now before making any report.
Is it time to blow the whistle on compounding pharmacy fraud?
If you have information regarding fraud involving compounding medications, the public may be relying on you to come forward and alert the authorities. Now you know what compounding pharmacy fraud is, how it targets TRICARE, and how recent cases have played out. Talk to a whistleblower lawyer to review your case and help you determine the best way for you to move forward.
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