The U.S.Department of Justice announced June 15 that Smart Pharmacy Inc., SP2 LLC and owner Gregory Balotin agreed to pay at least $7.4 million to resolve lawsuits filed in Jacksonville alleging they violated the False Claims Act by adding the antipsychotic drug aripiprazole to topical compounded pain creams to boost reimbursement and by routinely waiving patient co-payment obligations.
According to a news release, the settlement amount is based on the defendants’ ability to pay. The claims asserted against the defendants are allegations only and there has been no determination of liability.
“When pharmacies inflate their revenue with medically unsupported prescription ingredients, they compromise the quality of patient care and waste taxpayer dollars,” Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, said in the release.
U.S. Attorney Roger Handberg for the Middle District of Florida said a primary mission of the U.S. Attorney’s Office is protecting the Medicare and TRICARE programs from fraud.
“This case exemplifies our commitment to pursue pharmacies and pharmacists who abuse federal healthcare programs at the expense of the taxpayers,” Handberg said in the release.
Aripiprazole, which is sold under the brand names Abilify, Abilify Maintena and Aristada, is approved by the U.S. Food and Drug Administration to treat psychological conditions such as schizophrenia and Tourette’s disorder.
The government alleged that the defendants crushed aripiprazole pills approved for oral use and included them in compounded creams used topically for pain treatment, while knowing that there was not an adequate clinical basis to do so.
The defendants allegedly included the drug in the pain creams to increase their profits on prescriptions paid for by Medicare Part D and TRICARE, the federal health care program for active duty military personnel, retirees and their families.
Both reimburse pharmacies for the individual ingredients included in compounded drugs, thus defendants increased their reimbursement by adding aripiprazole to the combination of drugs used in their pain creams.
The government also alleged that the defendants improperly waived patient co-payments to induce patients to accept the pain cream prescriptions. Although co-payments may be waived in certain circumstances, such as an individualized assessment of a patient’s financial hardship, the defendants allegedly routinely waived co-payments without regard to patient need.
In connection with the settlement, Balotin agreed to enter into a three-year integrity agreement with the Department of Health and Human Services Office of Inspector General, which includes an annual claims review by an independent review organization.
The lawsuits, United States ex rel. Sanchez v. Smart Pharmacy, Inc., et al., No. 14-cv-1453 (M.D. Fla.), and United States ex rel. Kohli v. Smart Pharmacy, Inc., et al., No. 16-cv-387 (M.D. Fla.), were originally filed in the U.S. District Court for the Middle District of Florida by Amy Sanchez and Ashok Kohli, two former employees of Smart Pharmacy.
The lawsuits were filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and share in any recovery. The share to be awarded in this case has not been determined, the news release states.
The case was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Middle District of Florida, with assistance from HHS-OIG, DCIS, the Department of Veterans Affairs Office of Inspector General, the Department of Labor Office of Inspector General and the Office of Personnel Management Office of Inspector General.
The case was handled by Assistant U.S. Attorney Collette Cunningham for the Middle District of Florida; trial attorneys Nicholas Perros and Jessica Sievert of the Justice Department’s Civil Division; former Civil Division trial attorney Holly Snow (now an Assistant U.S. Attorney for the Western District of North Carolina); and former Civil Division trial attorney Andrew Jaco (now with the Justice Department’s Criminal Division).