Pharmacy Fraud - Jeff Newman Law

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Pharmacy fraud is a widespread issue that affects federal healthcare programs such as Medicare, Medicaid, and TRICARE. 

Unscrupulous pharmacies may engage in a range of fraudulent activities to boost their profits, often at the expense of these federal programs and their beneficiaries. 

If you have information about pharmacy fraud, our experienced whistleblower attorneys are here to help. We have a successful track record in representing whistleblowers in pharmacy fraud cases, ensuring justice is served while protecting your rights and interests.

Common Pharmacy Fraud Schemes

Pharmacies can engage in various fraudulent practices to increase profits from selling expensive drugs or paying kickbacks to various health care professionals.

Some common schemes, which we’ll discuss in greater detail below, include:

  • Dispensing drugs or other products without a proper prescription
  • Paying kickbacks for prescription referrals
  • Submitting fraudulent prior authorization requests
  • Submitting fraudulent reimbursement claims
  • Prescription drug diversion
  • Drug switching

Dispensing Drugs and Products Without a Proper Prescription

Pharmacies must obtain a signed doctor’s order or prescription before dispensing and billing Medicare for certain products they provide. However, some pharmacies disregard this requirement and bill Medicare for these products without proper authorization.

In one of our cases, attorney Jeffrey Newman represented a whistleblower in a $35 million settlement involving two pharmacy subsidiaries of Polymedica. These subsidiaries violated the False Claims Act by dispensing and billing Medicare for diabetic and nebulizer products without obtaining the necessary doctor’s orders or prescriptions.

Paying Kickbacks to Physicians and Others for Prescription Referrals

In some instances, pharmacies offer illegal kickbacks to nursing homes, physicians, or others who can direct prescriptions for expensive prescription drugs to their establishments.

In a 2021 example, six individuals, including employees of a Virginia pharmacy called Royal Care Pharmacy, and a former sales representative for Kaleo Pharmaceuticals, were sentenced on criminal charges that included pharmacy fraud.

The pharmacy had paid illegal kickbacks to the sales representative in exchange for referrals of prescriptions for an expensive naloxone auto-injector device used to treat opioid overdoses. The fraudulent schemes violated the anti-kickback statute and resulted in approximately $8 million in losses to federal, state, and private health care programs.

Submitting Fraudulent Prior Authorization Requests

Some pharmacies submit fraudulent prior authorization requests to health plans and pharmacy benefit managers (PBMs) to receive reimbursement for expensive prescription drugs. 

For instance, in 2019, the owner of a New Jersey pharmacy pleaded guilty to a charge that he directed his employees, including two pharmacists, to falsify prior authorization forms for medications for different conditions.

Submitting Fraudulent Reimbursement Claims 

Unscrupulous pharmacies can submit other types of false claims, including those that are driven by profit incentives and focused on maximizing their reimbursement from programs such as Medicare and Medicaid rather than on medical necessity. 

For example, a Milwaukee pharmacy chain paid over $2 million in 2022 to resolve allegations that it submitted false claims to federal health care programs for expensive prescription medications for Medicaid and Medicare beneficiaries that the pharmacy had changed from less expensive medications without any medical need or a valid prescription. 

Prescription drug diversion

This type of fraudulent activity occurs when prescription drugs are diverted from proper medical channels and into the illegal market. Prescription drug diversion can be performed by pharmacy employees or other health care professionals, such as if someone improperly signs or changes a prescription.

Drug Switching

Drug switching occurs when a pharmacy fills a prescription with a drug other than the one prescribed, such as with an improper generic substitution. In some circumstances, a generic drug could be appropriately substituted for a prescription drug, but outside of such circumstances, pharmacies are required to fill prescriptions as they have been written by the prescribing physician. Pharmacies profit by filling a patient’s prescription with a cheaper medication than the one prescribed and submitting a claim to Medicare Part D for the price of the more expensive prescription drug.

In a recent example, a pharmacist was convicted for his participation in a scheme to defraud Medicare of over $1 million in prescription drug benefits. The fraudulent activity at the pharmacy included billing Medicare for expensive compound drug creams while instead providing patients with a less expensive compound drug cream that wasn’t covered by Medicare.

Who Can Become a Pharmacy Fraud Whistleblower

Pharmacy fraud whistleblowers can come from various backgrounds and positions. Individuals who may have information about pharmacy fraud and could become whistleblowers include:

  • Current or former pharmacy employees such as pharmacists or administrative staff
  • Employees or contractors of pharmaceutical manufacturers, distributors, or other industry actors
  • Healthcare professionals such as physicians, nurses, or other medical staff who become aware of fraudulent practices
  • Patients or their family members 
  • Competitors or other industry insiders who become aware of fraudulent schemes

Regardless of your background or position, if you have information about pharmacy fraud, you may be eligible to become a whistleblower and could receive a whistleblower reward for your efforts.

Potential Rewards for Pharmacy Fraud Whistleblowers

whistle, attention, warning

Pharmacy fraud whistleblowers can potentially receive significant rewards for their efforts in exposing fraudulent activities. 

Under the False Claims Act (FCA), whistleblowers, also known as “qui tam relators,” can file a lawsuit on behalf of the government against entities that have defrauded federal healthcare programs.

In a successful qui tam lawsuit, the whistleblower can receive between 15% and 30% of the amount recovered.

Separate from the financial rewards, though, whistleblowers play a crucial role in helping the government detect and prosecute pharmacy fraud, protecting federal healthcare programs and taxpayer money in the process. 

Contact Us for Expert Whistleblower Representation

If you have information about a pharmacy engaging in fraud or a kickback scheme, our skilled whistleblower attorneys are here to help. We will guide you through the process, safeguard your rights, and ensure your interests are protected.

At Jeff Newman Law, we represent whistleblowers in healthcare fraud cases, and we have a track record of recovering multi-million dollar settlements on behalf of our whistleblower clients. 

Contact us for a free confidential assessment of whether you might have a potential healthcare fraud lawsuit that could result in a whistleblower award: