The U.S. Justice Department is in the early stages of investigating what authorities believe to be roughly $500 million in healthcare fraud perpetrated by companies that sell specialty creams designed to treat pain and other conditions, according to the Wall Street Journal. Under the Federal Food, Drug and Cosmetic Act (“FDCA”), generally, compounding is a practice in which a licensed pharmacist, a licensed physician, or, in the case of an outsourcing facility, a person under the supervision of a licensed pharmacist, combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient. Compounded drugs are not FDA-approved (so no verification of their safety or effectiveness).
Generally, state boards of pharmacy have primary responsibility for the day-to-day oversight of state-licensed pharmacies that compound drugs in accordance with the FDCA. Registered outsourcing facilities are regulated by FDA and must comply with good manufacturing practices and will be inspected by FDA according to a risk-based schedule. This change was put into place in through the Drug Quality and Security Act, signed into law on November 27, 2013.
Today, compounded topical pain creams are being heavily advertised to the elderly with the promise of relieving aches and cramping. Federal investigators are examining allegations that some of the most popular of these products have either little or no medicinal value, the Journal reported Saturday. Investigators are also looking into whether some companies engaged in illegal business practices during their dealings with private and public insurers, including those run by the U.S. government. Some firms charged as much as $10,000 to fill a single prescription. Tricare, the insurance program covering U.S. military personnel, veterans and their families, may have paid more than any other single victim of the alleged fraud as the program paid $1.75 billion for compounded drugs, including creams, during the 2015 fiscal year ending in September.
