Damian Williams, the United States Attorney for the Southern District of New York, announced on December 11, 2023, that a 47-year-old man had pleaded guilty to conspiracy to commit healthcare fraud in connection with engaging in a years-long scheme to defraud Medicaid, Medicare, and private insurance companies out of at least $20 million. Ten other defendants were charged in connection with the scheme in two separate indictments unsealed in March and October 2023. The defendant is scheduled to be sentenced on April 17, 2024.
According to the allegations contained in the Superseding Indictments and statements made in court proceedings, the defendant and others trafficked black-market HIV medication from at least 2017 through 2023, defrauding Medicaid, Medicare, and private insurance companies out of at least approximately $20 million. The scheme exploited hundreds of low-income individuals who had been prescribed HIV medication, jeopardizing the health and safety of those vulnerable patients.
The defendant distributed black-market HIV medications to pharmacies owned and operated by other co-conspirators, which were then dispensed to unknowing patients who believed they were receiving legitimate medication. To conceal their proceeds, co-conspirators used bank accounts associated with their respective pharmacies to funnel money to shell companies controlled by the defendant.
Compliance Perspective
Issue
US consumers rely on Food and Drug Administration (FDA) oversight to ensure that the drugs they receive are safe and effective. Title II of the Drug Supply Chain Security Act (DSCSA) outlines steps to achieve interoperable, electronic tracing of products at the package level to identify and trace certain prescription drugs as they are distributed in the United States. This enhances the FDA’s ability to help protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. Medications obtained from unlicensed sources may present safety issues since they have been manufactured or held outside of the jurisdiction of the FDA’s oversight. These medications may not be safe and effective for their intended uses and must be avoided in healthcare settings, where medications may only be obtained from authorized sources.
Discussion Points
- Review your medication management policies to ensure they include the requirement for purchasing all medications administered to residents from licensed pharmacies in the United States. Also review policies and procedures for preventing and reporting a false claim. Update as needed.
- Train appropriate staff about F755 Pharmacy Services requirements for obtaining medications only from US licensed pharmacies that dispense FDA approved medications and their responsibility to ensure this is followed as they provide medications to residents. Offer education to residents and resident representatives at the time of admission and through Resident Council on approved pharmacies used by the facility for acquiring medications, including that medications from unauthorized sources may not be brought to the facility for resident safety purposes. Document that this training occurred and place a signed copy of the training record in the employee’s education file, in resident records, or in Resident Council meeting minutes. Ensure that those who live or work in all levels of care in your settings are aware of the dangers of purchasing pharmaceuticals from unapproved sources.
- Audit to ensure that all medications administered to residents are obtained from a licensed pharmacy in the US that dispenses FDA approved medications and that they are properly labeled. If concerns are identified that residents, their representatives, or visitors are providing counterfeit or other non-FDA approved medications from unauthorized sources, immediately secure the suspect medications and notify the administrator, director of nursing, compliance and ethics officer, or call the Hotline.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
