Pharmacy Related Fraud

A person or entity being investigated or charged with pharmaceutical fraud by the federal or state government is typically accused of participating in fraudulent activities that result in false claims to insurers or programs, which can include Medicare and Medicaid, for financial gain to the company.

Both federal and state authorities are investigating the activities made by pharmaceutical companies in an effort to put a stop to fraud in the health care system. Consequently, many pharmaceutical entities are being unfairly investigated or being charged with a wide variety of fraud.

There are different types of fraudulent schemes that are particular to the pharmaceutical industry as described below.

GMP violations involve fraud associated with the Good Manufacturing Practice (GMP) regulations that require manufacturers to have strict procedures and practices to guarantee that the product being sold to the public meets the guidelines recommended by agencies that control pharmaceutical products.

Though physicians may prescribe drugs for off-label usage, the Food and Drug Administration (FDA) prohibits drug manufacturers from marketing or promoting a drug which has not been approved by the FDA. A manufacturer illegally misbrands a drug if the drug’s labeling includes information about the drugs unapproved uses. A drug is also misbranded if its label bears inadequate directions for use.  The label on a drug needs to include directions on how it is to be used by the specific consumer, as well as all of the ways the drug can be used as approved by the FDA.

Best price is a figure reported by the manufacturer to the Centers for Medicare and Medicaid Services (CMS) in quarterly reports under the Medicaid Rebate Program.  Best price is used to calculate the reimbursement rate provided by Medicaid. It is defined as the lowest price available to any wholesaler, retailer, provider, health maintenance organization (HMO), nonprofit entity, or the government. Best price includes cash discounts and free goods that are given based on the purchase, volume discounts, and rebates. The fraud occurs when the manufacturer falsely self-reports its best price.

The government can accuse a manufacturer, wholesaler, or pharmacy of misrepresenting material facts regarding the regulatory origin or status of their brand name drugs, the average manufacturer price, and/or the best price in order to decrease the rebate owed to Medicaid each quarter by the manufacturer or wholesaler, or increase the amount Medicaid pays to the pharmacy that sells the drug.

FDA guidelines authorize pharmacists to “compound” or mix medications according to a physician’s valid prescription. The regulations require that the mixed or compounded medications be medically necessary and not commercially available. Illegal compounding includes the compounding of ingredients to make a product that is the same as commercially available medications.  The Centers for Medicare and Medicaid Services (CMS) guidelines and other regulatory agencies prohibit coverage of claims for “compounded” medications when the “compounded” product is the same as a commercially available medication or it was not created because of a physician’s valid prescription.

Kickbacks are rewards such as cash, jewelry, free vacations, corporate sponsored retreats, Continuing Medical Education (CME) or other gifts used to attract medical professionals into using specific medical services.

If you are under investigation or charged with pharmaceutical related fraud make sure you contact Sam Rabin who can protect your rights and provide an aggressive defense.

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