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Pharmacy Fraud: Data Tells the Story

April 18th, 2022 by

Today’s Topic:  Did you know the DOJ never tires of chasing the bad guys?

If a pharmacy is going to engage in nefarious activities, it should expect to get caught. Fraud in these cases is generally easy to prove. Simply verifying inventory, orders and dispensing records yields incredible data that when combined with comparative data from peer pharmacies can be used by law enforcement to establish that fraud has been committed.

Latest Enforcement Activity

On April 13, 2022, the U.S. Department of Justice (DOJ) announced a 78-month prison sentence imposed against a 37-year-old owner/operator of several pharmacies in New York, Aleah Mohammed (Mohammed). The sentence was as a result of guilty plea entered by Mohammed in April 2021 for charges of mail fraud, health care fraud and conspiracy to commit health care fraud. As part of her guilty plea, Mohammed agreed to forfeit $5.1 million and pay $6.5 in restitution.

During the course of her criminal conduct, Mohammed engaged in multiple schemes to defraud health care programs, including obtaining more than $6.5 million from Medicare Part D Plans and Medicaid drug plans. Over a five-year period, Mohammed submitted fraudulent claims to Medicare and Medicaid for prescription drugs that were:

  • not dispensed;
  • not prescribed as claimed;
  • not medically necessary;
  • dispensed during a time when one or more of the pharmacies she operated was no longer registered with the State of New York; and
  • often for expensive prescription drugs to treat HIV.

Adding to the mounting evidence against her, Mohammed led a lavish lifestyle and purchased luxury items such a Porsche and jewelry.

Lessons Learned

It seems that criminals never learn. They think that they are smarter than law enforcement and will never get caught. But rarely do those criminals win in the end. It is basic accounting and law enforcement knows how to do that. Law enforcement mines each pharmacy’s data and looks for outlier information as compared to peer pharmacies as well as inventory data. So what information did the DOJ have at its disposal in this case?

  1. On hand inventory. As with any payer audit, the payer (and law enforcement) can obtain information concerning inventory on hand. If the pharmacy never had the inventory, it could not sell the drug.
  2. Drug purchasing records. Again, unless a pharmacy had the drug in inventory or purchased the drug through one of its wholesalers, it is hard for the pharmacy to defend against fraud charges when it is filing a claim for drugs never in its inventory.
  3. Dispensing records. Dispensing records also reveal information essential to determining what was in inventory, what was purchased and what was dispensed.
  4. Comparative data concerning dispensing of high-cost drugs as a proportion of other drugs sold.
  5. Comparative data looking at peer pharmacies for dispensing trends.

Collectively, the data and these records make it easy for law enforcement to identify and prosecute fraudulent claims. Even so, criminals seemingly are undeterred, and schemes like this one are repeated time and again.

Closing Thoughts

Simply put, crime does not pay. It does not matter whether it is in the pharmacy industry or elsewhere, when government funds are involved, law enforcement will surely be looking for wrongdoers. This probably is not the last case of its kind this year, so expect to see more news of pharmacies/pharmacists behaving badly.

How to Protect Your Pharmacy From Risky Prescriptions

December 31st, 2020 by

fhlf protect your pharmacyBy: Karen Davila

Pharmacies and their pharmacists are in a very tough spot in the current regulatory enforcement environment.  This is particularly true with dispensing controlled substances. Headlines like the below are commonplace:

DEA RAIDS PHARMACY AS PART OF LOCAL DRUG SWEEP

PHARMACY PAYS $500,000 IN PENALTIES FOR CONTROLLED SUBSTANCES ACT VIOLATIONS

MAN ARRESTED USING DOCTOR’S PRESCRIPTION PAD TO WRITE FRAUDULENT RX’S

So, how do you avoid filling a fraudulent prescription for controlled substances?  Before getting into the nitty gritty, it is important to lay the foundation of standard of care and the corresponding responsibility so pharmacies and pharmacists can evaluate what steps are most likely to mitigate these risks.

As background, federal law states that the primary responsibility for prescribing controlled substances rests with the prescriber.  However, that same law places a “corresponding responsibility” on the pharmacist to assure each prescription is written for a legitimate medical purpose pursuant to a valid patient-prescriber relationship.  21 CFR §1306.04(a).

Under Florida law:

  1. A pharmacist may not dispense a Schedule II-IV controlled substance to any patient or patient’s agent without first determining, in the exercise of her or his professional judgment, that the prescription is valid. F.S. §893.04 (2)(a).
  2. A prescriber or dispenser must consult the prescription drug monitoring system, eForce, to review a patient’s controlled substance dispensing history before prescribing or dispensing a controlled substance.S. §893.055

Once you have a clear understanding of a pharmacist’s liability, you can then consider ways to mitigate the inherent risks in filling controlled substance prescriptions. read more

Are Medical Marijuana Practices the New “Pill Mills?”

December 6th, 2019 by

medical marijuana practice dispensary physicianBy: Susan St. John

With the legalization of medical marijuana, I could not help but think, could a medical marijuana practice be the next “pill mill” and how could that be possible with the strict requirements set forth in Section 381.986, Florida Statutes. Turns out, only a handful of physicians are prescribing the majority of medical marijuana. While this may at first blush indicate a problem, keep in mind that marijuana, even medical marijuana is still outlawed under federal law and many physicians are not willing to risk a DEA license or possibly a state license to become a physician that certifies a patient for using medical marijuana. If a physician does become a qualified physician and issues medical marijuana certifications, certain practices and behaviors should be avoided.

A Practice with Similarities to a Pill Mill

In May 2019, Department of Health filed an administrative complaint against a “qualified physician” for basically over-certifying the use of medical marijuana. Pursuant to Section 381.986, there are only 13 medical conditions for which medical marijuana may be recommended. Of those 13 medical conditions, one is a bit of a “catch-all” as it is for medical conditions of the same kind or class as or comparable to a list of ten specific conditions, i.e., cancer, epilepsy, glaucoma, positive status for HIV, AIDS, PTSD, ALS, Crohn’s disease, Parkinson’s disease, and MS. This is where the physician ran into a problem. read more

The State Hemp Plan – SB 1020

June 10th, 2019 by

state hemp plan florida programBy: Susan St. John

As you may have heard, the State Hemp Plan, SB 1020, has passed the Florida House and Senate and is waiting for Governor DeSantis’ action (approval or veto) or inaction (no veto). The Governor’s approval or failure to veto SB 1020 means SB 1020 will become law. So what does this mean for Florida?

SB 1020 is meant to bring Florida’s laws regarding the cultivation and processing of hemp in line with the Federal Farm Bill of 2018 which removed hemp from the DEA’s list of controlled substances and legalized the industrial use of hemp. Currently, hemp is listed as a controlled substance under Florida law. SB 1020 will change that and allow cultivation of hemp and distribution and retail sale of hemp extract. read more

Prescribing & Dispensing Controlled Substances: Legal Update

June 5th, 2018 by

dispensing controlled substancesBy: Michael Silverman

A new law has been passed in Florida that pertains to prescribing and dispensing controlled substances. On March 19, 2018 Governor Scott signed HB21, which becomes effective July 1, 2018. Intended to address the growing nationwide opioid epidemic that has also greatly affected Floridians, among other requirements, the new regulations establish: read more

Balancing Safety and Innovation: Key Takeaways From The FDA’s Latest Stem Cell Reports

March 13th, 2018 by

fda stem cell businessBy: Matthew Fischer

Through two public channels this month, the FDA further solidified its stance on the innovative field of regenerative medicine.  First, in an article published in the New England Journal of Medicine (NEJM), Dr. Scott Gottlieb, FDA Commissioner, and Dr. Peter Marks, Director of the FDA’s Center for Biologics Evaluation and Research (CBER), co-wrote a new paper entitled “Balancing Safety and Innovation for Cell-Based Regenerative Medicine.”  On the same day of this publication, the FDA hosted a “Grand Rounds” webcast with Dr. Steven Bauer, Chief of the Cellular and Tissues Therapy Branch within CBER.  Taken together, these actions suggest a continued effort by the FDA to take a strong position against predatory clinics touting unapproved therapies while extending an open invitation to industry developers for expedited treatment to encourage innovation. read more

DEA Audit & Administrative Proceedings: Steps to Know

November 21st, 2017 by

pharmacy audit deaBy: Matt Fischer

The Drug Enforcement Administration (DEA) is responsible for the monitoring of all manufacturing and distribution of controlled substances in the country.  Pharmacies, medical providers (i.e., who either administer, prescribe or dispense), and distributors and manufacturers of controlled substances are required to register with the DEA.  The DEA’s Diversion Control Division is tasked with reviewing applications of potential registrants and monitoring existing registrants through audits and investigations.  However, the question on many registrants’ minds is what happens if violations or deficiencies are discovered?  The answer is it depends.  The consequences will vary based on the level of noncompliance.  Thus, it is essential to be familiar with the laws that apply and most importantly, have a full understanding of the administrative process in order to act quickly to minimize potential adverse action if noncompliance is found. read more

DEA Inspection and Audits: An Introductory Guide

November 7th, 2017 by

By: Matt Fischer

The Drug Enforcement Administration (DEA) is responsible for monitoring the supply and distribution of all controlled substances.  All medical providers, pharmacies, manufacturers of pharmaceuticals, and distributors of pharmaceuticals must be registered with the DEA.  DEA registrants are governed by an ever-growing web of federal laws and regulations which if violated may result in revocation of registration, fines, and/or criminal prosecution.  Therefore, it is important when starting a business or purchasing an existing business requiring DEA registration to be proactive and prepared for periodic administrative inspections or audits.

The Diversion Control Unit is tasked with monitoring compliance and empowered to conduct inspections by the Controlled Substances Act (CSA).  Under the CSA, diversion investigators have the authority to (1) inspect, copy, and verify records required to be kept (e.g., prescription and inventory records); (2) inspect equipment; (3) make a physical inventory of controlled substances; (4) collect samples of controlled substances; and/or (5) inspect any other records appropriate for verification under the CSA.  However, there are limits to what can be inspected (unless an owner or agent of the owner consents).  Inspections do not extend to financial data, sales data (other than shipping data), or pricing data. read more