Damian Williams, the United States Attorney for the Southern District of New York, announced on April 17, 2024, that a 47-year-old Brooklyn man was sentenced to nine years in prison for engaging in a years-long scheme that exploited vulnerable HIV patients and defrauded Medicaid, Medicare, and private insurance companies out of at least $20 million. In addition to the prison term, the defendant was sentenced to three years of supervised release, ordered to pay restitution in the amount of $13,270,379.50, and ordered to pay forfeiture in the amount of $4,401,495.00.
According to the allegations contained in the Superseding Indictments and statements made in court proceedings, from at least 2017 through at least 2023, the defendant and others engaged in a scheme that defrauded Medicaid, Medicare, and private insurance companies out of approximately $20 million through trafficking in black-market HIV medication. In doing so, they exploited at least hundreds of low-income individuals who had been prescribed HIV medication, jeopardizing the health and safety of those patients.
The defendant distributed black-market HIV medications to pharmacies that were owned and operated by other co-conspirators. That medication was then dispensed to unknowing patients who believed they were receiving legitimate medication. To further their scheme and 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.*
