Compounding pharmacies owners and compounding pharmacists can expect intense government scrutiny, especially if the pharmacy distributed pain, scar and other compounded formulations that were reimbursed by Tricare via Express Scripts or CVS Caremark.

Types of Cases

The government has focused on several issues, including:

• High Volume Cases – Pharmacies and pharmacists that fill a high volume of prescriptions for compounded medications containing identical, or nearly identical, chemical components, create an inference that these medications were not prescribed to meet a patient’s unique needs, but instead were bulk manufactured for profit.
• Failure to Confirm Relationship – Pharmacists who fail to exercise reasonable diligence to confirm the existence of a doctor-patient relationship, especially in circumstances where pharmacy records reflect that the physician and patient lived in different states, are being targeted for investigation. The government often seeks to verify whether the pharmacist or technicians made “verification calls” to confirm that these patients had, in fact, spoken with a doctor and requested a topical pain or scar cream.
• Pre-printed Script Pads – Pharmacies that supply physicians’ offices with pre-printed prescription pads, especially those reflecting controlled substances, are also being investigated. The government’s scrutiny is heightened when pre-printed formulations frequently change in a manner that increases the resulting reimbursement rate.
• Percentage Based Commissions – Pharmacies that pay percentage-based commissions to individual marketers or marketing companies to promote their compounded products, are being targeted. The government’s view is that these commissions violate the Anti-Kickback Statute and do not fit within a statutory exception or safe harbor.
• Research Studies Sponsorship – Pharmacies that sponsor “research studies” for the compounded medications, and pay doctors “research fees” in exchange for prescriptions, have also been targeted. In these circumstances, the government closely examines whether the research study was “bona fide” by examining: (i) the nature of the research protocol, (ii) whether the research data was collected and collated in a timely fashion, (iii) whether the research results were analyzed by a statistician, and subsequently peer reviewed or published, and (iv) whether the participating research physicians were paid a set amount per patient, regardless of the time involved, or whether they were paid a percentage of the prescribed drugs.
• Close Relationships – Pharmacies that hire and pay prescribing physicians to serve as Medical Directors must be very careful to avoid becoming a target of a government investigation. In these circumstances, the government closely examines whether the Medical Director relationship was legitimate or a ruse to generate demand for compounded medications.  The government will consider, among other things, whether (i) the Medical Director had a written contract, (ii) the contract lasted a year or more, (iii) the hourly rate was based on fair market value, (iv) the Medical Director had legitimate job duties and was required to report hours on a periodic basis, and (v) the Medical Director’s compensation varied based on the volume or value of the physicians’ compounded prescriptions.
• Automatic Refills – Pharmacies that automatically send refills without contacting the patient is another factor the government focuses on. For example, if the pharmacy encourages marketers to seek, and physicians to write, prescriptions reflecting “99” or “PRN” refills, the pharmacy/pharmacist can expect heightened government scrutiny.

Under Investigation?  You Need Help.

If you are a pharmacist or a pharmacy owner, and if you have received a subpoena, civil investigative demand or have other reasons to believe you are under investigation, it is imperative that you hire a lawyer who thoroughly understands the operations of compounding pharmacies, and has a wealth of experience defending federal health care fraud investigations. 

Free Consultation: 

Call us Today at (305) 614-1400

The attorneys at Stumphauzer Foslid Sloman Ross & Kolaya are uniquely qualified to represent you in these high-stakes government investigations where your freedom, livelihood and professional reputations are on the line.