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Compounding Interest in Healthcare Fraud

Whether it is TRICARE, Medicare, Medicaid, or private insurance, regular reports from news outlets and press releases from the Department of Justice reveal that compounding pharmaceutical fraud is on the rise and likely to remain a focus of law enforcement for the foreseeable future.

As recently as this weekend, the, the Tennessean published a lengthy investigative piece about a whistleblower initiated takedown of an alleged multi-state conspiracy involving servicemen in California being recruited and paid to order expensive pain creams they didn't need prescribed by doctors in Tennessee and dispensed by a pharmacy in Utah.

Tens of millions of dollars in billings to TRICARE, later, it appears this and related schemes have landed doctors, recruiters, and a pharmacy in hot water with the Federal government.

They aren't the first or the only providers to be accused of defrauding TRICARE through compounding drug schemes. And, as reported by the Pensacola News Journal last fall, these frauds often involve kickbacks and bribes to doctors for writing prescriptions and waved copays to patients, all so the pharmacies can bill the government for expensive unnecessary drugs.

Traditionally, drug compounding is the concocting of personalized medications prescribed by doctors for individuals to meet unique needs. These cannot be met or satisfied with ordinarily available drugs and require a unique formulation or creation. This may be as simple as customizing the strength of a medication or its dosage form or more complicated.

Because they are intended to be unique rather than mass produced, compounded drugs are not as heavily regulated by the FDA. They may also be more expensive, much more expensive. It is this final factor that is alleged to have attracted the attention of would-be fraudsters ­- which in turn has attracted the attention of whistleblowers and law enforcement.

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