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Compound Pharmacy Investigations Questions You Should Ask Your Attorney2 Jul 2020

Healthcare investigation aims to repossess money from overpayments and to prosecute the people involved. The research is carried out under the federal criminal statutes, also called criminal remedy. The Office of Inspector General leads the investigation among other government agencies.

The Department of Defense, Human Services, Department of Health, Postal Services, and other federal government bodies coordinates all investigations of the underlying accusations.

What is Compounding Fraud?

US Attorneys execute criminal search warrants to individuals in connection to compound pharmacies. Various records are often raised for accusations of different types of healthcare fraud ranging from falsified documents and kickbacks. However, most fraud associated with the pharmacies is a result of the capability of the business or individual’s ability to charge for each element in a compound formulation.

The allegations from the federal government need to show prove against the pharmacy that the patient did not need the ingredients added to the compound, and they did not benefit from it; but still, the pharmacy went ahead and used it to increase its remuneration.

What are the Types of Compound Fraud?

Compound pharmacy is a white color criminal offense, and healthcare fraud entities and the federal government regards it as a severe offense. It is usually categorized under felony and civil allegations. There are various activities which are regarded as fraud. The most punishable crimes which are commonly prosecuted and any pharmacies found guilty will be investigated charged and given penalties for compounding pharmacy fraud. The crimes include;

• Billing for identical products over the counter
• Billing for unnecessary healthcare products or overbilling
• Giving kickbacks to other healthcare providers
• Creating false financial and pharmaceutical records
• Carrying out fraud in government programs like Tricare. Medicaid and Medicare
• The fraud charges filed by the federal government include manufacturing of compound drugs similar to commercially available alternatives
• Charging for ingredients used to make healthcare pharmaceutical products

What Are the Penalties Involved?

The penalties vary according to each fraud case, its severity, and the cost of the crime. The investigation is done under the False Claims Act. For instance, if you get convicted of defrauding or attempting to defraud a healthcare program, you will face a 10-year jail term, civil punishments, or both. In the case of bodily injuries to the patient, the individual receives no less than five years of jail term and no more than ten years.

The penalty could be a life sentence if the crime results in death. Any individual convicted of making false records knowingly, giving statement materials to fraudulent claims, or planning to commit the offense and presenting fraudulent claims will be charged with a civil penalty not less than $10,000. The individual may also pay three times the amount defrauded or the damages caused.

How is Compound Pharmacy Fraud Investigation Done?

The investigation is carried out by the Department of Labor, FDA, and other federal government agencies, including the Office of Inspector General. The agencies target individuals or businesses associated with compounding fraud.

The individuals will need to provide production documents like marketing records, company information, financials, and employee relationships. Alternatively, the government agencies visit the alleged compound pharmacies location at the premises and request for a conversation with the employees. They present a search warrant, and the employees need to remain calm and act politely. The agents only ask questions and do not answer any.

Who Are the Individuals Investigated in Compound Pharmacy Fraud Cases?

The investigation exposes business owners and providers, and it applies to any business or individual who was either directly or indirectly involved. Such individuals include;

• Business Owners
• Business Financial experts
• Referrals of medical practitioners
• Pharmacists,
• Internal and external staff members and the owners.

Who is Inspected by the Drug Administration?

Compound pharmacies get inspected by the FDA, and the inspection is subject to business registration as an outsourcing body. Any pharmacy that compounds for a patient and gives dispensation upon the receipts of a specific prescription is exempted from the Food Drug Administration registration.

Also, a compound pharmacy is safe if they comply with Food Manufacturing Practices and carry out labeling as required. The FDA inspects pharmacies when they believe that the pharmacy does not meet the 503A exemption.

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