Compounding Pharmacy Enforcement Shows no Signs of Slowing

There’s certainly a lot of enforcement activity against compounding pharmacies these days.  The ramp-up began around 2012 after a fungal meningitis outbreak that caused 64 deaths and many more infections related to the compounding activities at New England Compounding Centers.  That heightened scrutiny continues to rock the compounding pharmacy world, not just from the drug quality, safety, and security standpoint, but also from the standpoint of the potential fraud and abuse inherent in the pricing of ingredients and the final compounded product as well as relationships between compounding pharmacies and the physicians who refer to them.

LATEST ENFORCEMENT ACTION

Announced yesterday by the U.S. Department of Justice (DOJ), the latest enforcement action is against Professional Compounding Centers of America Inc. (PCCA), a Houston-based supplier of wholesale compounding ingredients to other pharmacies.  In many prior enforcement actions, compounding pharmacies have been charged in various schemes to defraud the federal government by filing false claims for prescriptions that were not medically necessary or not requested by patients and paying kickbacks to prescribing physicians.  While similar in some ways to prior enforcement actions, this one differs because in this case, the DOJ reached back to the wholesaler of the compounding ingredients that were sold to the pharmacies that then submitted inflated claims to TRICARE.  Here, the DOJ nabbed PPCA in a complaint alleging False Claims Act violations, specifically that PCCA reported fraudulent and inflated Average Wholesale Prices (AWPs) for the compounding ingredients that it sold to pharmacies.  Those inflated AWPs resulted in pharmacies submitting inflated claims to TRICARE, the federal payer for military personnel and their dependents.Continue reading

Compounding Pharmacies Remain at the Tip of the Enforcement Spear

Compounding pharmacies are subjected to special licensing and permitting rules because of the heightened risk of the very nature of what they do- customizing a prescription by combining, mixing or altering ingredients to create a sterile or non-sterile medication for a given patient.  Pharmacies may only compound drugs where a commercially available drug/dose/formulation is not available.  Because of the heightened risk coupled with the high cost of compounded drugs and the increased prescribing of these expensive drugs, compounding pharmacies continue to be at the tip of the enforcement spear and a target for investigations.   This and the fact that the number of compounding pharmacies is only a fraction of the number of licensed pharmacies in the U.S., contributes to the increasing visibility when the U.S. Department of Justice prosecutes violators.

Growth of Compounding

From 2006 to 2015, the U.S. experienced a sevenfold increase in the prescribing of compounded drugs.  Recently, the compounding pharmacies market was valued at more than $9 billion and is projected to grow by another $5 billion over the next 30 years.Continue reading

Compounding Pharmacies and Alleged Tricare Abuses Back in the Spotlight

compounding pharmacyBy: Jacqueline Bain

On Thursday, February 11, 2016, the United States Attorneys’ Office from the Middle District of Florida announced a $10 million settlement with 4 physicians and 2 pharmacies regarding alleged abuses of Tricare program.  The case against these physicians and pharmacies was prosecuted as part of the United States government’s large-scale effort to combat questionable compounding practices.  Investigations revealed that patients were often prescribed compounded drugs that they never used, and that Tricare paid a mark-up cost of nearly 90% for compounded drugs over and above the pharmacy’s actual costs of making the drug.  Roughly 40% of the claims submitted by the pharmacies in question were written by 4 physicians with an ownership or financial interest in the pharmacies.

Tricare is a federal health care program designed to insure active duty military service members, reservists, members of the National Guard, retirees, survivors and their families.  Tricare outpatient costs have almost doubled in the last 5 years, and compound drugs have accounted for a large portion of that increase. Continue reading

Compounding Pharmacy Shells Out $3.775 Mil to Settle False Claims Suit

bonus calculationA Jacksonville compounding pharmacy has agreed to pay $3.775 million to settle false claims allegations that it defrauded TRICARE. MediMix Specialty Pharmacy billed TRICARE for compounding pain prescriptions that came from an improper referral source. MediMix’s top-prescriber over a period of five years was also married to one of MediMix’s senior vice presidents. MediMix itself was one of TRICARE’s top billers for compounded pain medications.

Since the federal law limiting physician self-referrals, 42 U.S.C. 1395nn (more commonly called the “Stark law”) does not apply to TRICARE, the government proceeded under a law entitled Administrative Remedies for Fraud, Abuse, and Conflict of Interest, 32 C.F.R. 199.9, which is applicable for claims submitted to CHAMPUS and TRICARE. This law is much more broad than the Stark law. While the Stark law contains specific exceptions, this law does not.Continue reading