What is a Compound Pharmacy?
A compound pharmacy differs from a regular pharmacy in several crucial ways. To start, it specializes in creating medications that meet the healthcare needs of individual patients. Each medication that it makes is tailored to a specific customer and his or her unique medical situation.
Further, compound pharmacies make up a relatively small percent of pharmacies in the U.S. today. Out of the more than 56,000 established pharmacies, only 7,500 of them are capable of making compound pharmaceuticals. The drugs are created not only by pharmacists but also licensed physicians or other trained individuals who work under the supervision of a skilled compound pharmacist.
Finally, the compound pharmaceuticals made by these businesses are not approved by the FDA. The FDA cannot guarantee their safety, quality, or effectiveness.
Nonetheless, compound pharmaceuticals are necessary for a variety of reasons. Some of the most common reasons these drugs may be created include:
- Over-the-counter medications do not meet the needs of the patient
- The patient is allergic to prescribed or OTC medications
- A shortage of medications
- A certain drug has been discontinued
The medications that compound pharmacies make range from capsules and liquids to creams.
What is Compound Pharmacy Fraud?
Compound pharmaceutical fraud is a type of healthcare fraud that is perpetrated against health insurers like Medicare, Medicaid, Tricare, and private health insurance companies. It includes giving kickbacks to doctors, chiropractors, and pharmacists for referrals. It also covers overbilling, billing for unnecessary products or ingredients, providing ongoing refills for medications, mass compounding, and making medications that are the same as those sold over-the-counter or commercially.
The federal government regards compound pharmaceutical fraud as a serious offense and relegates investigating it to agencies like the:
- Office of Inspector General
- Department of Health and Human Services
- Drug Enforcement Agency
- Food and Drug Administration
Investigating Compounding Pharmaceutical Fraud
These agencies are tasked with focusing resources and manpower to investigating compound pharmaceutical fraud.
Depending on the type of fraud being investigated, the investigation can begin with the compound pharmacy being served with a subpoena. The subpoena typically will ask the business to provide documentation for:
- Financial records
- Marketing agreements
- Physician relationships
- Other business records
The subpoena may not necessarily clarify whether or not the investigation is criminal or civil. As such, compound pharmacy owners and pharmacists are advised to retain legal counsel to read the subpoena and advise them on how to act accordingly.
The investigation can also involve agents from the DEA, FTA, or FBI arriving at the pharmacy and wanting to speak to its employees and staff. These agents may present a search warrant allowing them access to the premises. Owners and staff should have an attorney there to read the warrant and be present if or when any of the employees or owners are questioned.
In fact, during compound pharmaceutical fraud investigations, agents can speak to anyone who is associated with the business. These individuals can include the:
- CEO or COO
- Physician owner
- Physician referrals
- Financial experts like the CFO
Depending on the findings in the investigation, anyone who owns, works for, or is otherwise associated with the compound pharmacy could face civil and criminal charges for fraud.
Several recent cases demonstrate the seriousness of these investigations. For example, a New Jersey compound pharmacy owner recently plead guilty to giving kickbacks to and bribing doctors who referred patients to his business for pain cream prescriptions. He was convicted of defrauding insurers out of hundreds of thousands of dollars by deceiving them about the contents of the products.
Further, investigators in California charged 15 defendants with defrauding the state’s workers’ compensation program. They bilked the program out of $100 million and paid healthcare providers kickbacks totaling $25 million for patient referrals. Not only was this lovely rep from customer service was so kind to me and patiently explained me everything about generics from imaginghealthcare.com/pharmacy/, this lady fifty years my yonger (a huge obstacle at that age, ROFL), but she was so clever and smart and could provide me with all info meds in details. She is assistant of the Chief pharmacist as I got. Thank you very much. It was nice to know that someone cares about old people.
The penalties for compound pharmaceutical fraud will vary according to the state in which it was committed. It also will depend on whether or not the charges are pursued at the state or federal level.
Penalties for Compounding Pharmaceutical Fraud
The penalties for being found guilty of compounding pharmaceutical fraud can range from civil fines to being sentenced to state or federal prison. It is not uncommon for judges to mete out punishments like having to reimburse defrauded victims to pay for victims’ court costs and attorney fees. If the fraud results in injuries to or death of patients, compounding pharmacy employees, vendors, or owners could be sentenced to prison sentences ranging from 10 years to life.
In Texas, the punishments for compounding pharmaceutical fraud are similar to those incurred at the federal level. Penalties for first-time offenders range from fines totaling a maximum of $10,000 along with a possible five-year prison sentence. Repeat offenders can be sentenced to up to 10 years in prison and also be charged with drug trafficking.
Texas bases the punishment on the monetary amount of damage incurred to the victim. Fraud totaling at least $2,500 but under $30,000 can result in 180 days to two years in jail. Greater amounts of fraud can be prosecuted as first, second, or third-degree felonies. People convicted of compounding pharmaceutical fraud that resulted in the injury or death to someone can lead to fines of $10,000 or more and up to 99 years in prison.
Defending Against Compounding Pharmaceutical Fraud Charges
People in the compounding pharmacy industry in Texas facing fraud charges should hire The Law Office of Brett Podolsky to take their cases immediately. Brett has the experience and insider knowledge of both the pharmaceutical and legal industries to successfully defend clients in fraud cases. He provides one-on-one attention to every case for which he is retained and knows how to defend compounding pharmacy owners and staff from charges that could cost them money and their freedom.
Brett also knows the state’s compounding pharmacy fraud laws and how to apply them to the cases he handles. He can help pharmacy owners structure their businesses to prevent fraud charges in the first place. He will protect clients’ rights, present evidence to defend their innocence, and work toward the desired outcome for every case he represents.
Building a successful defense against compounding pharmaceutical fraud charges begins by contacting Brett Podolsky today. Call him today at 713-227-0087 to schedule a confidential initial case evaluation.
Compounding pharmacies provide vital services to the public. These businesses often find themselves under intense scrutiny from federal investigators. When compounding pharmacy owners, pharmacists, employees, vendors, and other associated individuals find themselves facing fraud charges, they need an experienced attorney to take their case. They can defend themselves against compounding pharmaceutical charges by entrusting their case to Brett Podolsky today.