Pharmacy Fraud

The days of the local friendly pharmacy are all but gone. Today pharmacies are big business, run by corporate conglomerates. Added to the mix are the so called “pharmacy benefits managers,” which administer pharmacy benefits and operate giant automated mail order pharmacy dispensaries. With big business now controlling the dispensing of our drugs, the system has become increasingly complex, and with that complexity opportunities for fraud abound. Here are some of the common schemes in the pharmacy industry:

Illegal Drug Substitution

When a doctor prescribes a drug, a pharmacy is required to fill the script as written. There are, however, significant financial incentives for a pharmacy to switch drugs. For example, due to inefficiencies in how drug prices are set, the price between different dosage forms of the same drug compound can be vastly different. Thus, there are many cases where the tablet form of the same drug compound costs over ten times more than the capsule form, and vice versa. Pharmacies are well aware of these cost discrepancies, and some regularly switch the dosage form of scripts without seeking doctor approval, and without telling the patient. This practice not only violates pharmacy dispensing laws and regulations, it costs the public a significant amount of money. Pharmacies caught engaged in illegal substitution schemes have been successfully prosecuted under the False Claims Act, paying tens of millions in damages and penalties.

Unauthorized Refills

Another common pharmacy scheme is where pharmacies automatically refill patients’ prescriptions without patient consent and then bill Medicare, Medicaid, or other government programs for the drug. Oftentimes the patient has stopped taking the drug, and the pharmacy resells the drugs to other patients despite having already been reimbursed. Pharmacies engaged in this fraudulent practice have substantial exposure under the False Claims Act.

Fraudulent Billing

A number of pharmacies have been caught engaging in a variety of fraudulent billing practices. These include (1) billing for a nonexistent prescription; (2) billing for a brand name prescription when dispensing a generic prescription; and (3) billing multiple payors for a single script. When these fraudulent bills are submitted to Medicare, Medicaid, or other government programs, the pharmacy has violated the False Claims Act.

Drug Diversion

Opioid abuse has reached epidemic proportions in this country. From 1999 to 2017, more than 400,000 people died from opioids, including prescription opioids. Drug overdoses are now the leading cause of death in the United States for people under 50.

Bad pharmacists have, unfortunately, fueled the opioid crisis through drug diversion practices. These pharmacists take the drugs out of circulation and sell them on the streets for a significant product. They may also fill prescriptions for opioids that are clearly fake. Pharmacists who engage in this wrongful conduct may also be in violation of the False Claims Act if the illicit prescriptions are reimbursed by Medicare, Medicaid, or other government-backed programs.